Motley Fool Money Microsoft and Alphabet’s Cash Stacks
Jul 26, 2023
In this discussion, Tim Beyers, a Motley Fool analyst, explores Microsoft’s impressive cash flow and strong cloud business, addressing the misconceptions behind its stock selloff. He emphasizes the need for patience with AI investments and sees a bright future for Alphabet as the advertising market recovers. Meanwhile, Mary Long, a colleague at Motley Fool, dives into the dynamics of dating apps like Bumble and Match, examining user retention and growth strategies in a competitive landscape. Their insights provide a compelling look at tech and relationships.
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Microsoft's Mixed Market Reaction
- Microsoft beat earnings and revenue expectations, with 8% top-line growth.
- However, the stock dropped 5% due to a slightly lower-than-expected revenue outlook and increased AI investments.
Microsoft's Cash Flow Strength
- Microsoft's strong free cash flow, estimated at $75-85 billion, justifies their investments in AI.
- Their substantial cash flow margin of 30-40% indicates financial health.
Azure's Dominance in Microsoft's Cloud Revenue
- Azure, Microsoft's cloud segment, accounts for over half of their $110 billion annual cloud revenue.
- Despite some deceleration, Azure continues to grow impressively at 27% year over year.