January 24 (Reuters)-Microsoft Corp (MSFT.O) It forecast cloud revenue for the quarter just below Wall Street’s expectations, dampening enthusiasm for beating quarterly earnings in the first half of Tuesday.
The stock initially surged in after-hours trading, but lost momentum after the company’s cloud forecast.
Microsoft announced third-quarter intelligent cloud revenue of $21.7 billion to $22 billion, though analysts expect $22.14 billion.
Microsoft’s cloud services business offset weaker PC markets in the second quarter. These results are likely to ease meltdown concerns in the tech industry. dismissed Tens of thousands of employees are working this year in anticipation of the recession.
Microsoft said its Azure cloud product sales grew 31% in the fourth quarter, in line with estimates compiled by Visible Alpha. Meanwhile, the broader Intelligent Cloud segment had revenue of $21.5 billion. In comparison, the Wall Street consensus compiled by Refinitiv is $21.4 billion.
Azure could get a boost from cloud spending from growing artificial intelligence. Brett Iversen, Microsoft’s head of investor relations, said of his OpenAI, in which the company has invested heavily:
OpenAI is behind ChatGPT, a chatbot sensation that can spit out love stories in the style of Shakespeare and other prose with text commands. That model is also built using compute time in Azure.
TECHnalysis Research’s Bob O’Donnell said, “Given the challenges of the current macroeconomic environment and concerns that things could have gotten much worse, Microsoft’s earnings are a pretty positive sign for technology as a whole. I think it is necessary to think that
Still, Microsoft, like other big tech companies, is looking to layoffs to weather the tough times, announcing more than 10,000 job cuts last week.
Azure is also steadily gaining market share from leader Amazon.com Inc. (AMZN.O) Amazon Web Services (AWS).
BofA Global Research estimates that Azure will end 2022 with a 30% share of the cloud computing market, up from 20% in 2018. AWS dropped from 71% to 55% over the same period.
Azure’s growth has slowed steadily from about 50% just over a year ago, but investors feared it could get worse. Amazon shares rose 3.25% after Microsoft’s results.
According to Refinitiv IBES, Microsoft’s revenue rose 2% to $52.7 billion in the three months ended Dec. 31, compared to the average analyst estimate of $52.94 billion.
Net income fell 12% to $16.4 billion in the second quarter, but Refinitiv calculates adjusted earnings per share at $2.32, beating Wall Street consensus forecasts of $2.29. I was.
Revenue from Microsoft’s More Personal Computing segment, which includes Windows, devices and search revenue, fell 19% to $14.2 billion as the PC market continued to shrink. Productivity and business process segment revenue increased 7% to $17 billion.
Reporting by Yuvraj Malik, Bangalore and Jane Lanhee Lee, Oakland, CA. Edited by Sriraj Kalluvila, Peter Henderson, Matthew Lewis
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