Microsoft’s shares took a nearly 5% hit in after-hours trading on Wednesday as its Azure cloud division reported growth figures that missed market expectations. While the tech titan beat earnings projections in its fiscal second-quarter report, fueled by progress in its artificial intelligence initiatives, investors remained cautious due to Azure’s underwhelming performance.
The company announced a striking 12% increase in revenue, reaching $69.6 billion for the second quarter of fiscal year 2025, with net income soaring to $24.1 billion. Earnings per share came in at $3.23, comfortably exceeding the anticipated $3.11 per share and $23.3 billion net income forecast by analysts surveyed by FactSet.
Looking ahead, Microsoft CFO Amy Hood provided revenue guidance for the fiscal third quarter between $67.7 billion and $68.7 billion, which fell short of the $69.8 billion analysts expected, according to FactSet.
Azure, once the shining star in Microsoft’s portfolio, saw its revenue climb 31% in the quarter. This figure narrowly missed the 31.8% growth predicted by Visible Alpha, sparking concern over the returns on substantial AI investments. Capital expenditure over the period totaled $22.6 billion, surpassing the consensus estimate of $20.95 billion.
Forecasting the current fiscal third-quarter, Hood projected Azure growth between 31% and 32%, still shy of the 33% analysts had hoped for, as per data from Visible Alpha.
