Microsoft’s Earnings Exceed Expectations But Cloud Growth Falls Short

Microsoft ( MSFT ) posted fiscal first-quarter earnings that beat Street forecasts, but its cloud revenue growth missed estimates.

The tech giant’s third-quarter revenue rose 16% year over year to $65.59 billion, higher than the analyst consensus from Visible Alpha. Net income of $24.67 billion, or $3.30 per share, was up from $22.29 billion, or $2.99 ​​per share, a year earlier and above expectations.

Microsoft’s Intelligent Cloud segment, which includes the Azure cloud computing platform, generated revenue of $24.09 billion, up 20% but below Street estimates of $28.97 billion.

Microsoft shares rose 0.7% in extended trading after the release. They were up more than 15% for 2024 through Wednesday’s close.

Microsoft’s results come as major technology companies face pressure to show their gains from artificial intelligence

Microsoft’s results come a day after Alphabet (GOOGL), Google’s parent company, beat analysts’ expectations, with CEO Sundar Pichai saying the company’s investments in artificial intelligence (AI) are “paying off and driving success.”

Microsoft, like Alphabet and other technology giants, has boosted its investments in artificial intelligence this year to secure its position as a leader in this field, raising concerns about rising spending and whether its efforts in the field of artificial intelligence are worth the cost.