Microsoft Corporation (NASDAQ:MSFT) stock pulled back 4% ahead of Wednesday’s open as traders’ enthusiasm waned upon closer consideration of last night’s superficially upbeat earnings.
AI was the watchword as Microsoft’s investment in ChatGPT-owner OpenAI began to bear fruit and, indeed, the initial integrations into Bing search and Skype seem to have caught the interest of the market.
Nevertheless, cloud computing, a ‘big tech’ focal point from the recent past, was the driver behind Microsoft’s share price moves – as the Azure unit showed slower revenue growth than expected (26% year on year, rather than 27% in the preceding three-month block).
It represented a continuation of a trend that has seen Azure’s growth decelerating in each quarter since Q3 2022, as enterprise clients trim spending amidst tightening economics and rising interest rates.
Overall, Microsoft posted a fiscal fourth-quarter 2023 earnings beat with the three-months ending 30 June showing a 21% increase in diluted earnings per share (EPS) to US$2.69. Whilst revenue increased by 8% to US$56.2bn.
Analysts, on average, had forecast EPS of US$2.54 on revenue of US$55.36bn, per Zacks Consensus Estimate.
Personal computing revenue, meanwhile, decreased by 4% to US$13.9bn, led by a 20% decline in device sales and a 12% drop in Windows OEM revenue.
“We remain focused on leading the new AI platform shift, helping customers use the Microsoft Cloud to get the most value out of their digital spend, and driving operating leverage,” said Microsoft chief executive Satya Nadell.
In New York, Microsoft shares traded down US$14.26 or 4.06%, priced at US$336.72 in pre-market transactions.