Microsoft Announces $60B Share Buyback Program, 10% Dividend Increase Amid Rising AI Investment And Restructuring

17 Sep 202401.44 UTC

Microsoft Corp. MSFT announced a new share repurchase program worth up to $60 billion on Monday.

What Happened: The tech giant also declared a quarterly dividend of $0.83 per share, marking a 10% increase from the previous quarter. The company will hold its annual shareholders meeting on Dec. 10.

In July, Microsoft revealed plans to increase spending on artificial intelligence infrastructure this fiscal year. The company reported a 77.6% rise in capital expenditures for the quarter ending Jun. 30, primarily due to AI-related costs.

Despite a slowdown in growth for its Azure cloud business in the last quarter, Microsoft expects growth to accelerate in the second half of fiscal 2025.

Last month, Microsoft restructured its business unit reporting, moving some search and news advertising revenue under the Azure cloud-computing unit.

This move follows Apple Inc. AAPL’s record $110 billion share buyback program announced in May.

Why It Matters: The announcement of the $60 billion share buyback program comes amid significant structural changes within Microsoft.

Recently, the company cut about 650 jobs in its gaming division following its $69 billion acquisition of Activision-Blizzard. This restructuring aims to streamline operations and enhance efficiency within the expanded gaming portfolio.

Additionally, Microsoft has been focusing on strengthening its cloud and AI capabilities. The company recently appointed Carolina Dybeck Happe as its new EVP and COO to bolster its cloud services and AI initiatives. This move is part of Microsoft’s strategy to compete with Amazon.com Inc. AMZN in the cloud services market.

Moreover, Microsoft’s investment in AI is underscored by its involvement with OpenAI, which is seeking a $150 billion valuation. This partnership highlights Microsoft’s commitment to advancing artificial general intelligence and maintaining a competitive edge in the AI sector.

Price Action: Microsoft’s stock closed at $431.34 on Monday, up 0.17% for the day. In after-hours trading, the stock rose by an additional 0.73%. Year to date, Microsoft has seen a strong performance, with its stock up by 16.30%, according to data from Benzinga Pro.

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