In addition to providing basic computing and storage, Microsoft offers a variety of services for developers, including high-margin databases and monitoring tools.
Gross margin in Microsoft’s cloud group widened from 42% in 2016 to 72% in the most recent quarter. The division includes commercial Office subscriptions, the commercial part of LinkedIn and Dynamics 365 enterprise software as well as Azure. Hood has said efficiency gains can come from improvements in power, cooling, data center design, chips and software.
Yun Kim, an analyst at Loop Capital, said in a note that Azure’s revenue growth could pick up.
“We expect its Azure business to accelerate starting next FY (or C2H) as tailwinds from new workloads from both new cloud deployments and GenAI initiatives ramp meaningfully,” he wrote.
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CNBC