Microsoft cloud growth misses estimates in Q4 despite jump in investment spending

Investing.comJul 31, 2024 12:58 AM

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Investing.com - Microsoft sinked in after-hours trading Tuesday after its fourth-quarter cloud revenue growth fell short of Wall Street estimates even as the tech giant ramped up spending on investments to boost growth.

Microsoft Corporation (NASDAQ:MSFT) was down more than 5% afterhours trading following the report.

The company announced earnings per share of $2.95 on revenue of $64.7 billion. Analysts polled by Investing.com anticipated EPS of $2.94 on revenue of $64.38B.

Azure, Microsoft's cloud business grew 29%, missing analyst estimates of 30.2%. That also marked a slowdown from 31% growth seen in Q3. Azure is widely viewed as a barometer for AI demand. AI-related growth accounted for about 8% of Azure's total growth, up from 7% in Q3.

Signs of slowing cloud growth come even as Microsoft continues to ramp up investments, with capital spending jumping to $19B in Q4, up from $14B in Q3, and nearly double the $10.7B seen in Q4 a year ago.

Revenue in productivity and business processes rose 11% to $20.3B as official commercial products and cloud services revenue climbed 12%.

Revenue in more personal computing was up 3% to $11 billion, with Windows revenue up 7%.

"Shares traded lower after hours following Intelligent Cloud segment revenue missing consensus, as Azure growth decelerated 1 point, missing buyside expectations and coming in at the low end of guidance," RBC said in a note following the results.

Disclaimer: The content of this article solely represents the author's personal opinions and does not reflect the official stance of Tradingkey. It should not be considered as investment advice. The article is intended for reference purposes only, and readers should not base any investment decisions solely on its content. Tradingkey bears no responsibility for any trading outcomes resulting from reliance on this article. Furthermore, Tradingkey cannot guarantee the accuracy of the article's content. Before making any investment decisions, it is advisable to consult an independent financial advisor to fully understand the associated risks.

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