What sort of company does Microsoft want to be? Its $2.2tn market value was built on cloud computing and enterprise software — high growth, high margin markets. Recent merger and acquisition exploits are more focused on lower growth, consumer business.

Last week, Microsoft announced a deal to buy gaming company Activision Blizzard for $68.7bn — the biggest in its history. The acquisition, which Microsoft says will help provide the building blocks for the metaverse, is equivalent to a hefty eight quarters of free cash flow. Yet there was a distinct lack of interest in Activision from analysts who attended the company’s earnings call on Tuesday. Aside from one attempt to pin down what exactly the metaverse is, most ignored it altogether.

It is admittedly hard to get excited about Microsoft’s gaming division when the twin engines of Office 365 software and Azure services are powering along. Quarterly results beat expectations on nearly every count. Revenues of $51.7bn, up 20 per cent on the previous year, prove that the end of the pandemic does not mean the end of corporate digital spending growth. Sales growth this quarter is expected to remain high at up to 18 per cent. The Office 365 price increase is a reminder of the margin power of software.