The only negative in Microsoft’s earnings in 2Q20 was Bing, expected based on consumer behavior trends. Azure continues to grow robustly as the company experiences supply constraints, just like everyone else in 2Q20. Over the next 4-6 quarters, we expect Project Jedi, the DoD’s Cloud project awarded in 2019 to Microsoft, to ramp up, which will be a significant positive to demand during the quarters in which it recognizes revenue.
Microsoft is not only benefiting from enterprises using Azure for application development but also in collaboration with Teams and Office 365. Almost all WFH scenarios help Microsoft, except for higher unemployment (less total office workers).
Microsoft remains the dominant #2 IaaS provider and is increasing its influence in the supply chain on future projects and deployments. In 3Q20, we expect LinkedIn revenue to moderate based on fewer companies hiring. We also expect the new XBox, Series X, to be a key driver for Microsoft’s Cloud services.
