Microsoft Corp on Tuesday reported strong quarterly earnings but saw its shares slip on figures showing its crucial cloud computing unit did not grow as strongly as expected.
Microsoft said it made a profit of US$22 billion on US$64.7 billion in revenue in the recently ended quarter, up from the same period a year earlier.
Cloud unit revenue of US$36.8 billion, however, disappointed investors and shares slid nearly three percent in after-market trades.
Photo: Gonzalo Fuentes, Reuters
Money brought in from cloud computing has driven blockbuster earnings quarter after quarter, and a hint that stellar growth may be slowing was enough to give investors pause.
Microsoft is among the major contenders in the race to build out artificial intelligence (AI) systems, pouring billions of dollars into the technology in the hope it will pay off.
The company is keen to monetize generative AI, having moved the fastest to implement it across all its products, and pouring US$13 billion into OpenAI, the start-up stalwart behind ChatGPT.
CFRA Research viewed the earnings results as "largely in line" across Microsoft's core businesses and believes that the company is "incrementally improving" the money it makes from AI, according to senior equity analyst Angelo Zino.
"Still, we acknowledge that the better-than-expected cloud results from Alphabet Inc last week had investors looking for more," Zino said.
Google-parent Alphabet reported profit and revenue that beat expectations as its AI-amped cloud and search ads businesses thrived.
The AI frenzy has helped Microsoft's cloud computing business grow in the double digits, which analysts said could be hard to sustain.
Microsoft's big stake in OpenAI along with its own Copilot AI help it maintain a leadership position in AI, according to Emarketer senior analyst Gadjo Sevilla.
Revenue from Microsoft's AI-infused "Intelligent Cloud" unit was US$28.5 billion, a 19-percent increase from the same quarter a year earlier, according to the earnings figures.
Microsoft CEO Satya Nadella said on an earnings call that use of its AI offerings is ramping up, from workplace software to Bing search and Copilot AI relied on by developers.
"I'm energized about the opportunities ahead," Nadella said. "We are investing for the long term in our fundamentals, in our innovation and in our people."
Microsoft's Azure platform drove a strong increase in revenue from server products and cloud services, according to the company.
Nadella said the company is "focused on meeting the mission-critical needs of our customers across our at-scale platforms today, while also ensuring we lead the AI era."
Microsoft reported a net income of US$88.1 billion for its fiscal year on revenue of US$245.1 billion, up 22 percent and 16 percent respectively.
Money taken in by Microsoft's Xbox video game unit leaped 61 percent, boosted by the acquisition of Activision Blizzard Inc, according to earnings figures.
Microsoft said costs to attract visitors to its search and news services rose 19 percent, as it pressed to compete with Google.
MARKET LEADERSHIP: Investors are flocking to Nvidia, drawn by the company’s long-term fundamntals, dominant position in the AI sector, and pricing and margin power Two years after Nvidia Corp made history by becoming the first chipmaker to achieve a US$1 trillion market capitalization, an even more remarkable milestone is within its grasp: becoming the first company to reach US$4 trillion. After the emergence of China’s DeepSeek (深度求索) sent the stock plunging earlier this year and stoked concerns that outlays on artificial intelligence (AI) infrastructure were set to slow, Nvidia shares have rallied back to a record. The company’s biggest customers remain full steam ahead on spending, much of which is flowing to its computing systems. Microsoft Corp, Meta Platforms Inc, Amazon.com Inc and Alphabet Inc are
Luxury fashion powerhouse Prada SpA has acknowledged the ancient Indian roots of its new sandal design after the debut of the open-toe footwear sparked a furor among Indian artisans and politicians thousands of miles from the catwalk in Italy. Images from Prada’s fashion show in Milan last weekend showed models wearing leather sandals with a braided design that resembled handmade Kolhapuri slippers with designs dating back to the 12th century. A wave of criticism in the media and from lawmakers followed over the Italian brand’s lack of public acknowledgement of the Indian sandal design, which is named after a city in the
The US overtaking China as Taiwan’s top export destination could boost industrial development and wage growth, given the US is a high-income economy, an economist said yesterday. However, Taiwan still needs to diversify its export markets due to the unpredictability of US President Donald Trump’s administration, said Chiou Jiunn-rong (邱俊榮), an economics professor at National Central University. Taiwan’s exports soared to a record US$51.74 billion last month, driven by strong demand for artificial intelligence (AI) products and continued orders, with information and communication technology (ICT) and audio/video products leading all sectors. The US reclaimed its position as Taiwan’s top export market, accounting for
INVESTOR RESILIENCE? An analyst said that despite near-term pressures, foreign investors tend to view NT dollar strength as a positive signal for valuation multiples Morgan Stanley has flagged a potential 10 percent revenue decline for Taiwan’s tech hardware sector this year, as a sharp appreciation of the New Taiwan dollar begins to dent the earnings power of major exporters. In what appears to be the first such warning from a major foreign brokerage, the US investment bank said the currency’s strength — fueled by foreign capital inflows and expectations of US interest rate cuts — is compressing profit margins for manufacturers with heavy exposure to US dollar-denominated revenues. The local currency has surged about 10 percent against the greenback over the past quarter and yesterday breached
RSS