corporate finance

Microsoft Doubles Down on Shareholder Value with a $60 Billion Share Repurchase Program

A major shift of investment was seen today as Microsoft announced a whopping $60 billion buyback of its shares to reward shareholders and boost investor confidence. This significant purchase comes alongside a 10% dividend increase, with a quarterly payout of $0.83 per share. According to the business world, this bold move by Microsoft demonstrates the tech giant's commitment to shareholder value.

The generous buyback strategy is said to be aimed at bolstering investor confidence. Especially amidst growing pressure on big tech companies to demonstrate returns on their substantial AI investments.

Big Tech’s AI Investment Showdown

This stunning display of confidence by Microsoft plans to increase spending on AI infrastructure, with capital expenditures surging 77.6% in the quarter ended June 30. As one of the few big companies to disclose AI contributions in its quarterly earnings, Microsoft is under scrutiny to deliver tangible results.

Azure Cloud Business: A Temporary Slowdown

While the big payment has ensured a vote of confidence in Microsoft AI, it has also led Azure cloud business to experience a growth slowdown. However, the company reassures investors that growth will accelerate in the second half of fiscal 2025.

Record-breaking Trending Streak

This buyback comes as an addition to the share buyback trend started by apple. In May 2024, Apple initiated an unprecedented $110 billion buyback, following which Microsoft is now seen to have done the same with $60 billion.

Market Anticipation

In the aftermath of the buyback, Microsoft's shares rose marginally, reflecting cautious optimism. With a 15% stock increase so far this year, investors are watching closely to see if Microsoft's strategic moves will yield long-term growth.

Key Takeaways from the Deal
  • Assured 10% dividend increase to $0.83 per share.
  • Increased spending on AI infrastructure makes it favourable for Athe AI market.
  • Azure cloud business growth slows down with the rise of AI investment.
  • Microsoft's annual shareholders meeting on December 10