What happened
Shares of Microsoft (MSFT 1.39%) surged by 51.2% in 2021, according to data provided by S&P Global Market Intelligence.
For context, the Nasdaq Composite index gained 22.2% last year, so Microsoft's gain was more than double that of the technology-heavy index. The technology giant produces computer software and hardware as well as personal computers and electronic accessories. It also runs a cloud computing service called Azure and owns LinkedIn, a popular business networking portal.
Image source: Getty Images.
So what
Microsoft was a big beneficiary of the digital surge as the pandemic spread across the world. As people hunkered down in their homes, they began using laptops, smartphones, and other devices to communicate with friends and family. Businesses also shifted online to survive and tapped technology and the internet to reach out to customers.
As a result, Microsoft reported a stellar set of earnings for its fiscal 2021 ended June 30, 2021. Revenue rose by 17.5% year over year to $168.1 billion, driven by a 29.4% year-over-year jump in services revenue to $97 billion. Net income jumped by 38.4% year over year to $61.3 billion. This strong growth momentum has continued in fiscal 2022's first quarter. Revenue rose by 22% year over year to $45.3 billion while net income surged by 47.6% year over year to $20.5 billion. The good news is that the revenue growth was broad-based and encompassed all of the company's divisions.
Now what
Microsoft continues to work on software enhancements that promise to endear customers to its suite of services. For Microsoft Teams, a videoconferencing software that individuals and companies use when telecommuting, updates are planned so that users can recruit fellow attendees to help them present or make changes to a file. Guests can also request certain administrator privileges.
The company is also working on other initiatives to increase its revenue streams. Chip giant Qualcomm has recently announced a partnership with Microsoft to accelerate the adoption of augmented reality for corporate clients. Both companies have a vision for the metaverse and will work on microchips and accessories to help deliver immersive experiences for users.
Meanwhile, consumer giant Johnson & Johnson plans to tap Microsoft's cloud computing service to connect surgeons and patients and build out its digital surgery division. The collaboration also involves device connectivity using the Internet of Things and Johnson & Johnson will also make use of other Microsoft services such as artificial intelligence, machine learning, and Microsoft 365 to enhance patient outcomes.
It's heartening for investors to hear of these partnerships as they show Microsoft's ability to work with a variety of clients to add value for the company to bring it to the next level. Riding sustainable digital tailwinds, Microsoft looks poised to continue its streak of revenue and net income increases for the foreseeable future.
