Microsoft shares dive on Azure growth slowdown
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The news: Microsoft reported a slowdown in its Azure cloud service in the fourth quarter, sending shares tumbling on the Nasdaq.
The numbers: Total revenue for the June quarter rose 15% on the prior corresponding period to USD64.7 billion ($98.96 billion). Diluted earnings per share was USD2.95, up 10% year on year.
Both tallies beat consensus estimates of $64.5 billion in revenue and $2.94 in per-share earnings, according to Bloomberg.
However, Microsoft's cloud computing business saw revenue growth of 29% to USD28.5 billion, decelerating from a 31% gain a year prior, and missing analysts' estimates of $28.68 billion, according to LSEG data.
Microsoft shares were down 6.4% to USD395.95 in extended trading by 7:30am AEST. They had closed the day 0.89% lower at USD422.92 before the earnings announcement.
The context: Microsoft's shares have climbed over 25% in the past 12 months, buoyed by the company's investments in AI, including in ChatGPT maker OpenAI.
However, shares have shed 10% since a record high on 5 July, as megacap stocks were hit by a wider market sell-off.
Azure, Microsoft's cloud computing platform and a key growth driver in recent years, is seen as central to the company's AI ambitions, with Azure cloud subscriptions now featuring OpenAI products.
What they said: "Our strong performance this fiscal year speaks both to our innovation and to the trust customers continue to place in Microsoft," said chairman and CEO Satya Nadella.
"As a platform company, we are focused on meeting the mission-critical needs of our customers across our at-scale platforms today, while also ensuring we lead the AI era."
The sources: Microsoft earnings release, Bloomberg
