Microsoft Shares Decline On Slower Cloud Growth Forecast

Microsoft Corp. shares fell in after-hours trading following the company’s forecast of slower quarterly cloud revenue growth, reflecting challenges in bringing data centers online quickly enough to meet rising demand for artificial intelligence (AI) services, Bloomberg’s Dina Bass and Matt Day reported.

The conservative outlook followed an otherwise positive earnings report, with first-quarter revenue rising by 16% to $65.6 billion and profit reaching $3.30 per share. I Photo: squirrel83 Wikimedia Commons

Sales from Microsoft’s Azure cloud-computing business are expected to grow 31% to 32% in the current period, according to Microsoft executives on a call following its first-quarter earnings report.

Azure revenue posted a 34% gain in that quarter, adjusted for currency fluctuations, which was a slight decline from the 35% growth seen the previous quarter.

The conservative outlook followed an otherwise positive earnings report, with first-quarter revenue rising by 16% to $65.6 billion and profit reaching $3.30 per share, exceeding expectations.

However, Chief Financial Officer Amy Hood told analysts that some of the data center capacity Microsoft had anticipated for its AI expansion had not come online as planned, which would limit Azure revenue growth in the quarter ending in December.

“We are in short supply, so we’re focused on balancing capacity,” Hood said in an interview.