Investing.com — Microsoft (NASDAQ:MSFT) reported second-quarter earnings that beat analyst expectations, but shares fell 4.7% in after-hours trading as Azure cloud growth merely met market forecasts rather than exceeding them.
The tech giant posted adjusted earnings per share of $4.14, surpassing the analyst estimate of $3.93, while revenue reached $81.3 billion, above the consensus estimate of $80.23 billion and up 17% YoY.
Despite these strong results, investors appeared disappointed that Azure cloud revenue growth of 39% only narrowly topped analyst expectations of 38.8%. Microsoft will provide guidance on its earnings conference call.
Further pressuring the shares, Microsoft’s capital spending rose to $37.5 billion in its fiscal second quarter, up nearly 66% year on year and above expectations of $34.31 billion.
On the other hand, Microsoft’s cloud business continued its strong performance, with Microsoft Cloud revenue exceeding $50 billion for the quarter. Operating income rose 21% to $38.3 billion compared to the same period last year.
“We are only at the beginning phases of AI diffusion and already Microsoft has built an AI business that is larger than some of our biggest franchises,” said Satya Nadella, chairman and chief executive officer of Microsoft.
The company’s net income on a GAAP basis increased 60% to $38.5 billion, while non-GAAP net income rose 23% to $30.9 billion. Microsoft noted that non-GAAP results exclude the impact from investments in OpenAI.