Microsoft stock was down today despite excellent earnings. You are probably thinking, “Henry, I thought you just said the earnings were ‘MacroHard.’ Why would the stock be down?” Well, dear reader, the stock was down because investors are stupid and are always the same. I will delve deeper in a second, but you should remember that you do not look forward to earnings reports for stock jumps, although those are also nice. You look forward to earnings reports because they give you more knowledge about the company you want to or already have money in.

Microsoft was projected to have revenue clocking in at around $61 billion. Instead, it clocked in at over $62 billion. That may not sound like a major difference, but 1 billion dollars over projection is a really good beat. On top of the beat, anytime your revenue is growing 18% year over year as a company this big, you are in a good spot. EPS (earnings per share) also beat by 15 cents, and most importantly, Azure (Microsoft’s cloud services system) grew at a 30% clip. Thirty percent growth is a large number and two percent higher than the projected clip. Most importantly, Azure grew at a faster rate than Google’s cloud service sector. All the numbers were great, and Satya Nadella, the G.O.A.T, said something I loved hearing: “We’ve moved from talking about AI to applying AI at scale,“ CEO Satya Nadella said in a statement. “By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains across every sector.”

That line is very encouraging if you are a Microsoft investor because it focuses on what you want: AI stacking. If Microsoft can integrate AI across all of its products, it can have something similar but better than Apple’s product integration. They can lock in customers and keep them. We’re already seeing the effects of some of this integration with the Productivity and Business Processes segment- Microsoft Office and others- gaining 13%. If the Microsoft products are best to integrate, then you need their hardware. Microsoft's personal computing revenue was up 19%.

A couple of drawbacks are that Microsoft is firing many people. AI spending is high, with capital expenditures increasing by three hundred million since the last quarter. To counter higher AI spending, Microsoft has been cutting many jobs. Usually, I do not care much about people getting fired in the company I own, but I do want to make sure Microsoft is not cutting too much talent. When it comes to tech, you need smart people; more than any other sector, you need smart people. I would rather Microsoft spend more than cut unnecessarily, but the great thing about being invested in a company like Microsoft is that you can trust the leadership team. Do not become complacent, but do not be fearful.

To summarize, it all comes down to cloud growth with Microsoft right now in the market, which is foolish. Microsoft’s cloud services are extremely important, but there are also so many components of Microsoft that are important: gaming, hardware, software, etc. Not only is cloud computing weighted too heavily, investors were way too optimistic; I mean, I have no idea what they were expecting. Projections for cloud growth were TWENTY-EIGHT PERCENT, and Microsoft somehow beat that, and still, STILL, people are selling. You have to remember that there are some very stupid, very emotional people in the market. Those who stay on strategy outperform the market: stay on strategy.