Microsoft forecasts slower cloud business growth in second quarter

-Microsoft predicted increased spending on artificial intelligence this quarter but slower growth in its cloud business Azure, signaling that big AI investments were not enough to keep pace with capacity constraints at its data centers.

AI contributed 12 percentage points to Azure's growth in the first quarter, compared with 11 percentage points in the prior three-month period. Revenue rose 16% to $65.6 billion in the fiscal first quarter ended September, compared with analysts' average estimate of $64.5 billion, according to LSEG. Outside its cloud business, Microsoft reported revenue of $28.3 billion in its productivity business, which houses its Office suite of applications, 365 Copilot and its AI and speech-technology services.

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