Microsoft Earnings: Stock Tanks As AI Business Growth Worse Than Expected

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Derek Saul is a New Jersey-based Senior Reporter on Forbes' news team. He graduated in 2021 from Duke University, where he majored in Economics and served as sports editor for The Chronicle, Duke's student newspaper, joining Forbes soon thereafter.

Microsoft delivered strong earnings, but it wasn’t enough to satisfy Wall Street during an unusually tense time for investors in big tech companies, as worse-than-forecasted results in its artificial intelligence business sent Microsoft shares spiraling.The headlines were strong for Microsoft, which beat forecasts on the top and bottom line: Microsoft reported $2.95 diluted earnings per share in the three-month period ending June 30, checking in just above consensus analyst forecasts of $2.

Yet, shares of Microsoft cratered about 7% following the earnings announcement, already nursing a more than 8% decline over the last three weeks. The slide came as growth in Microsoft’s crucial AI businesses was worse than expected, as its 29% growth in its Azure cloud computing unit fell short of projections of 31%, and sales in its AI-heavy intelligent cloud division was $28.5 billion, below estimates of $28.7 billion.

Microsoft’s after hours share price of below $400 would be its lowest intraday level since May 2, while its 7% slide would be its worst day since October 2022, though after hours trading tends to bring more volatility.Last quarter was easily Microsoft’s highest-grossing one yet, trouncing the prior record of $62.02 billion set in the quarter ending last December and closing out Microsoft’s fiscal year with a bang. Microsoft’s $88.

 

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