Microsoft Earnings Exceed Expectations as Azure Revenue Growth Slows

Microsoft (MSFT) reported its fiscal fourth-quarter earnings on Tuesday, surpassing Wall Street’s estimates for both earnings per share and revenue. Despite this, there was a decline in the growth of Azure cloud revenue compared to the previous quarter.

In the fourth quarter, Microsoft’s revenue increased by 8% to $56.2 billion, surpassing the estimated $55.5 billion. Adjusted earnings per share also rose by 21% to $2.69, beating the estimated $2.55.

The growth of Azure and other cloud services revenue was 26% year-over-year, which is a 1 percentage point decline compared to the previous quarter. Azure’s growth has been declining sequentially for several quarters, drawing attention from investors as companies reduce their capital expenses due to rising interest rates.

In terms of segments, Productivity and Business Processes Revenue increased by 10% to $18.29 billion, surpassing the estimated $18.1 billion. More Personal Computing Revenue decreased by 4% to $13.9 billion but still exceeded the estimated $13.58 billion. Intelligent Cloud Revenue, which includes Azure, experienced a 15% growth in the quarter, reaching $24 billion, slightly above the projected $23.8 billion.

For the fiscal year 2023, Microsoft’s revenue increased by 7%, marking the lowest annual growth rate since 2017.

Despite Microsoft’s stock rallying this year with a 43% increase, it fell by as much as 2% in after-hours trading following the earnings release.

Microsoft has been actively integrating artificial intelligence (AI) into its products. The company announced a $10 billion investment in OpenAI, the creator of ChatGPT, and has integrated AI into its Bing search product. Most recently, Microsoft announced the pricing for its upcoming AI product, Copilot, which will be integrated into Microsoft 365 products. Copilot is designed to summarize emails, reformat PowerPoint bullets, and generate drafts based on outlines.

Microsoft CEO Satya Nadella emphasized the company’s focus on leading the AI platform shift and helping customers leverage the Microsoft Cloud to maximize the value of their digital investments.

This is a breaking news story and more information will be provided as it becomes available.