TLDR:
- Microsoft approves new $60 billion share buyback program
- Quarterly dividend increased by 10% to $0.83 per share
- Annual shareholders meeting scheduled for Dec. 10
- Company faces pressure to show returns on AI investments
- New AI features unveiled at recent “Wave 2” event
Microsoft, the tech giant, has announced a new $60 billion share buyback program and a 10% increase in its quarterly dividend. The company’s board of directors approved these measures on Monday, September 16, 2024, as part of its ongoing efforts to return value to shareholders.
The new buyback program replaces a previous $60 billion initiative launched in 2021. This latest program has no set expiration date, giving Microsoft flexibility in its implementation. The move places Microsoft among the top U.S. companies in terms of share repurchase programs for the year, trailing only Apple and Alphabet.
In addition to the buyback, Microsoft raised its quarterly dividend from $0.75 to $0.83 per share. This represents a 10% increase and will be payable on December 12 to shareholders of record as of November 21. Despite the hike, Microsoft’s dividend yield remains relatively low compared to other companies in the Dow Jones Industrial Average.
These shareholder-friendly actions come at a time when Microsoft is heavily investing in artificial intelligence (AI) infrastructure. The company has been facing pressure from investors to demonstrate returns on its substantial AI investments. In July, Microsoft announced plans to increase spending on AI infrastructure in the current fiscal year to meet growing demand.
To showcase its AI progress, Microsoft held a “Wave 2” event on the same day as the buyback announcement. The company unveiled several new AI features and upgrades to its Copilot AI assistant. These include the general availability of Copilot in Excel and OneDrive, as well as an Outlook feature that summarizes emails.
The timing of these announcements is significant, as it reflects Microsoft’s efforts to balance shareholder returns with its commitment to AI innovation. The company’s CEO, Satya Nadella, has been vocal about the transformative potential of AI and has positioned Microsoft as a leader in this space.
Microsoft’s financial performance has been strong, with the company reporting a 77.6% increase in capital spending for the quarter ended June 30, largely due to AI-related expenses
. However, the company also noted a slowdown in growth at its Azure cloud business during the same period, though it expects growth to accelerate in the second half of fiscal 2025.
The tech industry as a whole is under scrutiny to demonstrate tangible benefits from AI investments. Microsoft is one of the few large companies that break out AI contributions in their quarterly earnings reports, although the impact on overall financial results is still in its early stages.
In terms of market position, Microsoft remains the world’s second-largest company by market capitalization, valued at approximately $3.2 trillion. It trails only Apple, which has a valuation just under $3.3 trillion.
The company’s stock has performed well year-to-date, rising about 15% through Monday’s close. In after-hours trading following the buyback and dividend announcements, Microsoft shares edged up slightly.
Microsoft has scheduled its annual shareholders meeting for December 10, where investors will likely seek more details on the company’s AI strategy and financial outlook.
