From CNBC: 2025-01-29 20:08:23

Microsoft reported revenue of $69.6 billion in Q2 of fiscal 2025, a 12% increase from the previous year. Earnings per share also rose by 10% to $3.23, exceeding estimates. However, the disappointing cloud revenues and soft guidance caused the stock to drop over 5% in extended trading. Azure cloud revenue growth fell short of expectations, raising concerns about AI investments. Despite solid results, Microsoft’s outlook and cloud revenue growth missed analyst estimates, leading to a decline in stock price. The company’s AI business showed promise, but non-AI cloud-related execution issues impacted results. Microsoft remains a core productivity provider and is investing heavily in AI and cloud infrastructure. Though the future looks promising, uncertainties remain around the impact of Chinese startup DeepSeek’s low-cost AI model and the need for faster cloud revenue growth. Microsoft’s revenue and operating income exceeded expectations in key segments, with double-digit growth in productivity and business processes. Despite overall positive results, the cloud computing business Azure fell short of projections, with revenue guidance for the next quarter below analyst estimates. Microsoft’s revenue outlook for Q3 of fiscal 2025 was lower than expected, particularly in the intelligent cloud segment. Azure revenue growth guidance of 31% to 32% indicates stabilization rather than the reacceleration management had anticipated. The company cited challenges in go-to-market execution and increasing headwinds from a stronger U.S. dollar impacting total revenue growth. Microsoft expects operating margins to increase slightly year over year and plans to maintain spending levels for the remainder of the fiscal year. Additionally, the company anticipates lower capex growth in fiscal year 2026. CEO Satya Nadella expressed optimism about the growth opportunities in AI and cloud computing, highlighting the potential for increased demand as AI becomes more efficient and accessible. Nadella emphasized the positive impact of lower cloud computing costs on AI infrastructure consumption and hinted at the future ubiquity of AI. Despite concerns about Azure revenue growth and execution challenges, Microsoft remains focused on expanding its AI capabilities and driving future growth.



Read more at CNBC:: Microsoft delivers an earnings beat but misses where it matters most