Microsoft Corporation (MSFT)is one of the largest broad-based technology providers in the world. Microsoft’s second-quarter results gained from strong Intelligent Cloud and Productivity and Business Processes revenues. Productivity and Business Processes revenues rose due to a strong adoption of Office 365 Commercial solutions. Microsoft 365 Consumer subscribers grew to 78.4 million. Continued momentum in the small and medium businesses, frontline worker offerings and a gain in revenue per user drove the top line. Intelligent Cloud revenues were driven by growth in Azure and other cloud services. Solid adoption of Azure AI, which now has a clientele of more than 53,000 customers holds promise. We believe efforts to reward shareholders through share buybacks and dividend payments deserve a special mention. MSFT’s earnings are expected to grow 18.3% for the current fiscal year.
Shopify Inc. (SHOP)provides a multi-tenant, cloud-based, multi-channel commerce platform for small and medium-sized businesses (SMBs). Shopify’s shares have outperformed the industry over the past year. Shopify is benefiting from strong growth in the merchant base as witnessed in third-quarter 2023. It has been focused on winning merchants regularly based on product offerings, including Shop Pay and Shop Pay Installments. Solid adoption of new merchant-friendly applications holds promise. Partnerships with YouTube, Twitter, Facebook, Instagram, and Google are expected to expand its merchant base. The divestiture of the logistics business to Flexport will boost profitability. Shopify has a strong balance sheet with ample liquidity. Over the past three months, the Zacks Consensus Estimate for SHOP’s full-year earnings has moved higher. This is a sign of improving analyst sentiment and a positive earnings outlook trend. Shopify is outperforming its peers so far this year.
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