Microsoft's cloud business keeps profits flowing in tougher times

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Microsoft posted results on Tuesday (Jan 24) that showed some strength in the face of a weak economy, buttressed by a cloud business that hit Wall Street targets for the end of 2022, but it may miss expectations in the current quarter.

The relatively stable outlook helped assuage fears that the lucrative cloud segment for big tech companies could be hit hard as customers look to cut spending, and cloud revenue in the fiscal second quarter reported on Tuesday made up for some weakness in the PC unit.

The small miss on Microsofts cloud earnings forecast is likely just a reflection of the new economic reality that businesses are facing and not a harbinger of something worse," said Bob O'Donnell, chief analyst at TECHnalysis Research.

Microsoft joined other big tech companies in turning to layoffs to ride out harder times, announcing last week it was cutting over 10,000 jobs. It posted fiscal second-quarter earnings exceeding Wall Street's estimate.