Microsoft Stock Plunges in After-Hours Trading as Cloud Revenue Growth Falls Short
In a surprising turn of events, Microsoft (NASDAQ: MSFT) saw a significant drop in its stock price during after-hours trading on Tuesday. This came after the tech giant reported fourth-quarter cloud revenue growth that fell short of Wall Street estimates. Despite increasing investments to drive growth, Microsoft's cloud business, Azure, only grew by 29%, missing analyst expectations of 30.2%.
The company reported earnings per share of $2.95 on revenue of $64.7 billion, slightly higher than the anticipated EPS of $2.94 on revenue of $64.38 billion. However, the slower growth in Azure, which is considered a key indicator of AI demand, has raised concerns among investors.
Despite ramping up investments with capital spending jumping to $19 billion in Q4, Microsoft's cloud revenue growth has shown signs of slowing down. This is a worrisome trend as the company continues to focus on expanding its cloud services and products.
On a positive note, revenue in productivity and business processes rose by 11% to $20.3 billion, with official commercial products and cloud services revenue climbing by 12%. Revenue in the more personal computing segment also saw an increase of 3% to $11 billion, driven by a 7% growth in Windows revenue.
Overall, Microsoft's performance in the fourth quarter has raised concerns among investors and analysts. The deceleration in Azure growth and the lower-than-expected revenue figures have led to a drop in the company's stock price after hours.
In conclusion, investors should closely monitor Microsoft's future performance, especially in the cloud business, as it continues to be a key driver of growth for the tech giant. This slowdown in cloud revenue growth could have broader implications for Microsoft's overall financial health and stock performance in the coming quarters.
