Microsoft released its fiscal fourth-quarter earnings, revealing a strong performance on the top and bottom lines but falling short of cloud revenue expectations. Microsoft reported strong quarterly earnings, but Microsoft stock dropped over 6% due to missing cloud revenue expectations.
For the quarter, Microsoft reported earnings per share (EPS) of $2.95, surpassing Wall Street’s forecast of $2.94. Revenue also exceeded expectations, reaching $64.7 billion compared to the anticipated $64.5 billion. This marks a notable increase from the previous year’s EPS of $2.69 and revenue of $56.2 billion.
Microsoft’s overall cloud revenue matched expectations at $36.8 billion. However, the Intelligent Cloud segment, which includes Azure services, reported revenue of $28.5 billion, slightly missing the projected $28.7 billion. Despite this shortfall, the segment saw a 19% year-over-year growth, contributing significantly to the company’s overall revenue increase of 21%.
Impact of AI on Cloud Services
Despite beating overall revenue and earnings per share estimates, Microsoft stock dropped over 6% after the report. AI services played a crucial role in boosting Microsoft’s Azure and other cloud offerings, adding 8 percentage points to the growth in this area. These services saw a 29% increase, reflecting strong demand for AI-driven solutions.
Microsoft’s results had a ripple effect on other tech giants, with shares of Meta dropping more than 3% in after-hours trading. The report comes shortly after Alphabet, Google’s parent company, announced a rise in cloud revenue, partly due to interest in AI products. However, Alphabet did not provide specific figures on AI’s impact, with analysts like UBS’s Stephen Ju predicting significant revenue contributions from AI spending by early 2025.
Microsoft’s recent earnings report showcased impressive financial performance, with the company surpassing both revenue and earnings per share expectations. The tech giant reported earnings per share of $2.95, slightly above the anticipated $2.94, and total revenue of $64.7 billion, exceeding the forecasted $64.5 billion. This represents a significant year-over-year growth from $2.69 per share and $56.2 billion in revenue. Despite these strong numbers, the market response was less favorable, resulting in Microsoft stock dropping over 6%.
Microsoft’s Market Position
The company’s cloud revenue, particularly in the Intelligent Cloud segment, fell short, and Microsoft stock dropped over 6%. According to UBS analyst Karl Keirstead, Microsoft has been gaining market share from competitors like Google and Amazon. The company’s early adoption of AI technologies has been a consistent advantage, as reflected in customer and partner feedback over the past year.
As the tech industry continues to focus on AI and cloud services, Amazon (AMZN) is set to report its earnings on August 1. So far this year, shares of Google have risen 22%, while Amazon’s shares have increased by 23%.
Microsoft reported strong fiscal fourth-quarter results, beating earnings and revenue expectations. The tech giant announced earnings per share of $2.95 on $64.7 billion in revenue, surpassing analysts’ estimates of $2.94 per share and $64.5 billion in revenue. This performance reflects significant growth from the previous year’s figures of $2.69 per share and $56.2 billion in revenue.
However, the company’s cloud business, a key area of growth, did not fully meet expectations. While overall cloud revenue reached $36.8 billion, in line with forecasts, the Intelligent Cloud segment, which includes Azure, posted $28.5 billion, slightly below the expected $28.7 billion. This minor miss caused a 7% drop in Microsoft’s stock during after-hours trading.
Despite this, Microsoft’s cloud business still grew by 21% year-over-year, with Intelligent Cloud revenues up 19%. The company highlighted that its AI services contributed significantly to the growth in Azure and other cloud services, which saw a 29% increase. Microsoft’s performance comes amid a broader focus on AI in the tech industry, with rivals like Alphabet also reporting gains in cloud revenue.
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