Microsoft shares posted their worst performance in two years after disappointing near-term guidance. Despite the strong financial results for the previous quarter, investors paid more attention to the company’s cautious guidance for the next quarter, which led to a 6% decline in the share price. It was the biggest drop since October 2022, when Microsoft shares fell 7.7% on news of the launch of ChatGPT from Microsoft-backed OpenAI.
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The company forecast revenue in the range of $68.1 billion to $69.1 billion for the quarter ending in December, according to CNBC. However, this figure falls short of the expectations of analysts, who predicted revenue of $69.83 billion. At the same time, key areas such as Azure cloud services continue to show good results – here revenue increased by 33%. Microsoft CFO Amy Hood noted that growth in the fiscal second quarter will be about 31-32%, taking into account currency fluctuations.
By comparison, Google this week reported growth of its cloud business by 35% to $11.35 billion, and Amazon, a leading player in the cloud infrastructure market, reported its results after the close on Thursday. Despite the decline in Microsoft shares, BofA Global Research analysts were positive about its results, especially in the Azure and Office segments, and still recommend buying shares.
Microsoft’s fiscal first-quarter revenue increased 16% year-over-year to $65.59 billion, beating analysts’ average estimate of $64.51 billion, according to LSEG. Earnings per share of $3.30 beat the average estimate of $3. ,10. At the same time, net profit increased by 11% to $24.67 billion year-on-year.
It is noted that external partners are delaying the supply of Microsoft data center infrastructure, which means that the company will not be able to meet demand in the second fiscal quarter. However, the company’s CEO Satya Nadella expressed confidence that the supply situation will improve.
At the same time, Microsoft continues to actively invest in artificial intelligence and expanding its infrastructure to handle heavy workloads. In this regard, according to Amy Hood, the company expects a loss of $1.5 billion in the current quarter, mainly due to investments in OpenAI.
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