Microsoft Plans To Leverage A 'Malleable Resource' To Thrive In A Recession, Satya Nadella Explains
On Wednesday, Microsoft Corporation (NASDAQ:MSFT) says its focus on cloud services and customer-centric solutions could help the company not just survive a recession, but grow through it.
What Happened: During Microsoft's third-quarter earnings call, CEO Satya Nadella addressed a question about how the company would respond if the U.S. economy slips into a recession.
Nadella pointed out Microsoft's unique positioning, highlighting the critical role its cloud infrastructure and software services could play in helping businesses do more with less.
"The way, at least I think we will approach it, is quite frankly, be very focused on how we help our customers," Nadella said.
“I think if you sort of buy into the argument that software is the most malleable resource we have to fight any type of inflationary pressure or any type of growth pressure where you need to do more with less, I think we can be super helpful in that,” he added.
He concluded by saying Microsoft's approach would center on supporting its customers through challenging times, with an eye toward gaining market share in the process.
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Why It's Important: Microsoft reported third-quarter revenue of $70.07 billion, marking a 13% increase from the same period last year and surpassing Wall Street’s estimate of $68.43 billion.
Revenue from Microsoft Cloud reached $42.4 billion, up 20% year-over-year.
On the same day as Microsoft's earnings, it was reported that the U.S. economy shrank by 0.3% in the first quarter of the year, surprising analysts who expected a slight growth of 0.4%.
This is the first economic decline in nearly two years (since the second quarter of 2022), and a sharp reversal from the 2.4% growth seen in the previous quarter.
Private employers added only 62,000 jobs in April, far below forecasts of 108,000 and the weakest hiring pace since July 2024.
Price Action: On Wednesday, Microsoft's stock rose 0.31% during regular trading and gained another 6.93% in after-hours, reaching $422.66, as per Benzinga Pro.
In Benzinga Edge’s Stock Rankings, Microsoft has a growth score of 64.61% and a momentum score of 42.33%. Click here to see how it stacks up against its industry competitors.
Photo courtesy: Tada Images / Shutterstock.com
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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