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Microsoft reveals record profits of $15.5bn as work from home booms

Microsoft CEO Satya Nadella
Microsoft CEO Satya Nadella

Microsoft last night kicked off what is expected to be a blowout results season for Silicon Valley’s giants by revealing record profits if $15.5bn, as lockdowns and home working drive households to online services.

The software giant reported a 33pc increase in quarterly profits, as well as a 17pc increase in revenues that smashed Wall Street forecasts and saw shares climb to a record high in late trading.

It reported revenues of $43.1bn, up from $36.9bn a year earlier, and profits of $15.5bn, up from $11.6bn.

Its cloud division Azure, which rents out computing and web hosting resources, grew by 50pc, demonstrating the surge in demand for online services.

The company’s gaming division was boosted by the launch of its latest Xbox consoles and increasing dependence on online gaming, growing by 40pc.

Meanwhile, the prolonged work from home trend saw sales of online software increase. Its Office 365 software suite, which includes the growing workplace software tool Teams, grew by 11pc.

It comes as Apple and Facebook are set to report record figures on Wednesday. Amazon and Google parent Alphabet are due to follow next week, rounding out a clean sweep of record earnings for Big Tech.

Both Amazon and Apple are expected to report sales above $100bn for the first time, and the five companies’ combined quarterly revenues are expected to come close to $350bn.

The figures are likely to underscore how the world’s biggest companies, which have seen their values swell during the pandemic, have profited from increasing reliance on technology and the internet even as turmoil hits much of the rest of the economy.

Microsoft’s jump in revenues last night suggested that the tech boom underpinned by the pandemic is showing no signs of slowing down, with video gaming, cloud computing and work software sales all growing.

Satya Nadella, Microsoft’s chief executive, said the pandemic had led to a new wave of IT services, which would continue into the future.

"What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping every company and every industry,” he said.

Shares in the tech giants have significantly outpaced the wider stock market in the last year and they now account for more than a fifth of the S&P 500 - a greater concentration than in the dotcom bubble.

The rises have come despite the companies attracting increasing scrutiny from regulators. Both Facebook and Google were sued by the US government last year over claims they had abused their power.