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Microsoft’s AI bet pays off as Azure revenue grows, but stock falls on infrastructure supplier delays
- Microsoft reported fiscal first quarter earnings of $3.30 per share, beating Wall Street’s target of $3.10 per share, while revenue jumped 16% from a year earlier, to $65.59 billion, ahead of the $64.51 billion consensus estimate.
- However, the company's forecast for the current quarter's revenue is lower than the Street's forecast for the same period, i.e. $68.1 billion - $69.1 billion vs. $69.83 billion.
- The company attributed the lower guidance to delays in equipment delivery from data center infrastructure suppliers.
- Microsoft's Azure and other cloud services revenue growth metric excluded sales from mobility, security and data analytics tools, providing a clearer picture of Azure consumption, which increased by 33% in real terms and 34% at constant currency.
- Sales from productivity and business processes increased 12% YoY to $28.32 billion, coming just ahead of the $27.9 billion consensus estimate.
- Microsoft's IoT investments have made it tough to gauge how much revenue the company is generating from these endeavors.
- Microsoft's More Personal Computing segment is smaller but still managed to grow 17% YoY in revenue.
- Despite many analysts feeling that "agentic AI" will be the next big AI industry area, Microsoft has yet to reveal its hand in this space.
- Microsoft's stock fell more than 3% in the after-hours trading session.
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