The optimism came despite a sharp contraction in the PC market, a stronger U.S. dollar and signs of macroeconomic weakness that contributed to Microsoft’s growth last quarter, leaving revenue and profit below the reduced guidance it issued last month. Chief Executive Satya Nadella told analysts that Microsoft had taken market share in its businesses and demand for its cloud services was expected to remain strong as many IT users looked for more affordable ways to run their computers. “There’s something going on in the macro environment that we think is playing to our strengths,” Nadella said, with cloud computing acting as a “deflationary force” helping Microsoft even as the economy weakens. Microsoft shares have fallen 28 percent since their peak in November, according to the Nasdaq Composite, as investors worried it would be hit by a slowdown in consumer and business demand. But on Tuesday it forecast revenue and profit growth in the current fiscal year, which began this month, would reach at least 10 percent, even after the effects of a strong dollar. The firm guidance for the full year came despite a relatively weak forecast for the current quarter. Microsoft said it expected revenue of between $49.25 billion and $50.25 billion in the quarter to the end of September, lower than the $51.7 billion Wall Street analysts had forecast. The software company said its operating profit will be further boosted this year by a change in the depreciation of its servers and networking equipment. The tool will be written off in six years instead of the previous four, adding $3.7 billion to operating income this year. For the latest quarter, Microsoft said it missed $1 billion in revenue compared to what it expected three months ago, as the dollar strengthened further, accelerating a deterioration in the PC market due in part to production shutdowns in China and the weakening of advertising spending. It also reported a $126 million charge from winding down much of its Russia business and $113 million in severance costs from a recent round of cost cuts. However, steady demand for cloud services has allowed it to withstand much of the pressure. Revenue at the Azure cloud platform rose 46 percent excluding the impact of the strong dollar, slightly slower than the 49 percent growth in the prior quarter. It also reported a 35 percent increase in cloud bookings in constant currency terms, compared to the first months of the year.

Bookings were “significantly” above internal expectations and showed that customers were making “bigger and longer-term commitments” to the Azure platform, Nadella said. The decline in PC sales left growth at Microsoft’s More Personal Computing division at 5% in constant currency terms, compared with 13% in the previous three months. Global PC shipments fell 12.5 percent in the quarter, the biggest decline in nine years, according to research firm Gartner. Microsoft reported revenue of $51.9 billion, up 12 percent from a year earlier, while earnings per share rose 3 percent to $2.23. Wall Street had expected revenue of $52.4 billion and earnings of $2.30 per share. Excluding the impact of the stronger dollar, revenue growth slowed to 16%, from 21% in the first three months of 2022.