Microsoft Shares Slip on Weak Quarterly Revenue Guidance

Microsoft Shares tumbled as much as 5% in extended trading wedding after after the software company Issued fiscal second -Quarter Results that Included Lighter Growth in Azure Cloud Computing Computing The company also Gave a disappointing Quarterly Revenue Forecast.

Here’s how the company did in comparison with wall street expectations, based on a survey of analysts by lseg:

• Earnings per share: $ 3.23 vs. $ 3.11 Expected
• Revenue: $ 69.63 billion vs. $ 68.78 Billion Expected

With respect to guidance, amy hood, microsoft’s finance chief, called for $ 67.7 Billion to $ 68.7 billion in Fiscal Third-Quarter Revenue CompAred with the $ 69.78 billion consucersus forg

Microsoft’s Revenue Grew 12.3% Year Over Year in the Fiscal Second Quarter, which ended on dec. 31, according to a statementThat represents the Slowest Growth Since Mid-2023. Net Income of $ 24.11 billion was up from $ 21.87 billion in the same Quarter a year ago.

The company’s intelligent cloud segment, which contains the azure cloud, contributed $ 25.54 billion in revelation. That was up about 19% but beLow the $ 25.83 billion Consensus Among Analysts Polled by Streetaccount.

Revenue from Azure and other cloud services jumped 31%, down from 33% in the prior quarter. Microsoft now has a $ 13 billion annualized revant Rate for Artificial Intelligence, CEO Satya Nadella was quoted as saying in the statement in the statement.

Of the growth in the fiscal second Quarter, 13 Percentage Points Came from Ai. Microsoft does not disclose azure revenue in dollars. Analysts Pollled By CNBC and Streetaccount Had Been Looking for 31.9% and 31.1% growth, respectively.

For the fiscal Third Quarter, Hood Sees 31% to 32% in Azure Growth at Constant Currency, as the Company Addresses Execution Challenges and Continues to Endure Capacity Consstrants. Streetaccount’s consensus at constant currency was 33.4%. In October, Hood Had Said Azure Growth All Accelerate in the Second Half of the fiscal year in comparison with the first half.

Microsoft Might Revamp Its Sles Function to Better Address Market Conditions.

“Primarily these are customers we record through partners and through some more indirect methods of Selling,” HOOD SAID. “And really the art form there is this as these customers which we have to try in this way are trying to balance. Motion in the summer and really changed to try to balance that that two. “

Microsoft’s Productivity and Business Processes Segment, Which Includes Office Productivity Software Subscriptions and LinkedIn, Posted $ 29.44 Billion In Fiscal Secal Secal Secal Second-Quarter Revenue. That was up 13.9% and more than streetaccount’s $ 28.89 billion Consensus.

The More Personal Computing Unit, Which Includes Windows, Bing, Surface and Xbox, Delivered $ 14.65 Billion in Revenue. The number was flat year over year and higher than the streetaccount consensus of $ 14.29 billion.

Sales of Devices and of Windows Operating System Licenses from Device Makers WERE Up 4%. Technology Industry Researcher Gartner estimated That the PC Shipments Increased 1.4% in the Quarter.

Microsoft had $ 2.29 billion in its “other expenses” line item. In October Hood Had projected $ 1.5 Billion in “Other Expense,” mainly because of microsoft’s share of expected losses at Openai, in which microsoft has injected carely $ 14 billion to data.

During the fiscal second Quarter, Microsoft Announced The Windows 365 Cloud Link, A PC That Corporate Workers Can Use To Access their applications And files stored in the cloud. The company’s github unit, with 150 million people, announced support For artificial intelligence models from anthropic and Google For a programming chatbot in addition to existing support for Openai. Microsoft also Invested an additional $ 750 million Into Openai during the Quarter.

“Openai has a lot more coming soon, so stay tuned,” nadella said on the conference call.

Microsoft Shares Slipped 2% on Monday as Investors Considered The implications of ai models from deepsek, a chinese lab. Deepseek in December ITRODUCED An Open-Source Model That The Lab Said It Trained for $ 5.6 Million, Excluding costs of data and earlier research. That would make it more efficient than models from Major us companies. And last week, Deepseek said its newest model, R1, outpermed Openai’s in Some Tests.

Deepsek’s R1 Model is now available through Microsoft’s Azure Ai Foundry and Through Github, and it will only be available to run on cops, nadella said on the call.

“AI scaling laws are controluing to compound across bot pre-training and infection-time competition,” He said. “We Oorselves have been seen significant efficiency gains in both training and infection for years for. , And more than 10x for every model generation due to software optimizations. “

The company reported $ 15.80 billion in fiscal Second-Quarter Capital Expenditures, Excluding Finance Leases. The Consensus Among Analysts Pollled By Visible Alpha Was $ 15.70 Billion.

Capital Expenditures Should be similar in the fiscal third Quarter and Again in the Fourth Quarter, Hood Said. And in the 2026 fiscal year, capital spending growth should be lower than in the current fiscal year.

“The mix of spend will begin to shift back to short-live assets, which are more correlated to revenue growth,” Hood said. On Jan. 21, Microsoft was absent from a white house press conference for the Stargate ai infrastructure Project Involving Openai That Cold Attract Up to $ 500 Billion in Investment.

Before the Earnings release, Microsoft Shares was up 5% so far in 2025, while the s & p 500 index had gained about 3% in the same period.

Watch: Benchmark’s Bill Gurley: Microsoft-Openai Deal Sounds Like One of the Most Complex of All Time