Business

Microsoft extends lead as world’s most valuable company with record profits

Microsoft has extended its lead over Apple as the world’s biggest listed company after beating investors’ expectations with a jump in profits.

The Seattle software giant surpassed Wall Street forecasts despite a slowdown in its fast-growing cloud division and a decline in sales at its video games unit.

Microsoft became the world’s most valuable company this year, leapfrogging its historic rival and passing a trillion-dollar valuation amid booming revenues from cloud computing, in which businesses pay to rent computing resources from Microsoft.

On Thursday it said that growth at Azure, its cloud unit, had risen 68pc year-on-year in the three months to the end of June, a slower rate of growth than investors have become accustomed to.

Gaming revenues declined 10pc, largely down to a slump in sales of Microsoft’s Xbox as gamers await the next generation of home consoles, expected to arrive next year.

Despite this, Microsoft’s quarterly revenue climbed 12pc to $33.7bn (£26.9bn) as sales of its Windows operating system benefited from a rebound in PC sales and sales of its Office software suite, which includes Word and Outlook, improved.

Profits were up 49pc, partly due to a tax benefit, and increased 20pc on an operating basis.

Shares climbed by around 1.3pc in after-hours trading after the results, giving Microsoft a market value of around $1.05 trillion.

Satya Nadella, the company’s chief executive who has overseen the shift to cloud computing, said Microsoft was signing bigger cloud deals with large companies.