Microsoft’s Stock Falls 5% As Cloud Computing Growth Comes Up Short

Shares of Microsoft (MSFT) are down 5% after the software company reported financial results that showed weak growth in its Azure cloud computing unit.Microsoft did manage to beat Wall Street forecasts on the top and bottom lines for what was its Fiscal second quarter.The Seattle-based company announced earnings per share (EPS) of $3.23 U.S., which was ahead of the $3.11 U.S. consensus expectation of analysts. Revenue in the period of $69.63 billion U.S. topped the $68.78 billion U.S. that was anticipated. Sales were up 12% from a year earlier.However, revenue from Azure and other cloud services increased only 31% year over year during the quarter ended Dec. 31, down from 33% growth in the previous quarter. Analysts had forecast cloud growth of 31.9%. Of the cloud computing growth, only 13 percentage points came from artificial intelligence (AI). Microsoft’s results come days after the launch of Chinese AI app DeepSeek, which has raised questions about the amount of money U.S. companies are spending on the technology.Microsoft has committed to spend $80 billion U.S. on AI infrastructure in the current fiscal year. Among Microsoft’s other operating units, the Productivity and Business Processes segment that includes Office productivity software subscriptions and LinkedIn posted $29.44 billion U.S. in sales, up 13.9% from a year ago. The Personal Computing unit that includes Windows, Bing, Surface, and Xbox delivered $14.65 billion U.S. in revenue, which was flat year over year. Sales of devices and Windows operating system licenses were up 4% from the previous year.Prior to today (Jan. 30), the stock of Microsoft had risen 8% in the past 12 months to trade at $442.33 U.S. a share.