Microsoft (MSFT) unveiled its fiscal fourth quarter profits, overcoming both bottom-line and top-line hopes but missing on cloud revenue projections.
Microsoft reported EPS of $2.95 on revenue of $64.7 billion, beating Wall Street’s hopes of EPS of $2.94 on revenue of $64.5 billion, according to Bloomberg data. This marks an increase from the same period last year, when Microsoft reported EPS of $2.69 and revenue of $56.2 billion.
The overall cloud revenue matched expectations at $36.8 billion, but the Intelligent Cloud segment, which includes Azure services, dipped at $28.5 billion over the anticipated $28.7 billion.
Microsoft shares fell to almost 2% in pre-market trading on Wednesday, having fallen over 7% earlier in reaction to the results.
Microsoft’s overall revenue rose 21% year over year despite missing cloud revenue expectations, with Intelligent Cloud revenue increasing 19%. Notably, AI services contributed 8 percentage points to the growth of Azure and other cloud services revenue, which grew by 29%.
Microsoft’s miss in the AI segment affected other AI-centric companies like Meta, whose shares fell more than 3% in after-hours trading.
This earnings report comes after Google parent Alphabet (GOOG, GOOGL) announced its own earnings last week, noting an increase in cloud revenue partly driven by AI product interest. However, Google did not provide specific figures on AI’s impact on the cloud business, leading analysts like UBS’s Stephen Ju to predict that AI revenue benefits may not materialize until the first half of 2025.
UBS analyst Karl Keirstead noted that Microsoft is also gaining market share from Google and Amazon.
CFO Ruth Porat reported $13 billion in capital expenditures during Alphabet’s earnings call, up from $12 billion in the previous quarter, primarily directed along the side of AI.
Amazon (AMZN) is expected to make an announcement of its earnings today, August 1.
The shares of Amazon have increased by 23%, while the shares of Google have risen by 22% year to date.
