New York, Thursday, October 31, 2024- Microsoft Corporation (MSFT) surpassed analysts’ fiscal first-quarter earnings expectations but saw its cloud revenue growth lag, raising concerns over cloud competitiveness in a booming AI market, according to its Q3 earnings report.
The company’s total revenue increased 16% year-over-year, reaching $65.59 billion, surpassing forecasts from Visible Alpha analysts. Net income rose to $24.67 billion, translating to $3.30 per share—up from $22.29 billion or $2.99 per share the previous year.
However, Microsoft’s Intelligent Cloud division, inclusive of Azure, reported revenues of $24.09 billion, marking a 20% year-over-year increase but falling below the projected $28.97 billion.
Microsoft shares reacted positively, edging up 0.7% in after-hours trading. The stock has gained over 15% in 2024, driven by significant investments in artificial intelligence, an area Microsoft is heavily leveraging to drive future growth. Analysts remain vigilant, however, over the increasing expenses tied to AI development and whether returns will justify this investment strategy.
This earnings release closely follows Google parent Alphabet’s (GOOGL) strong report, with CEO Sundar Pichai attributing Alphabet’s performance to its robust AI efforts. Both tech giants are positioning for dominance in AI, but Microsoft’s cloud underperformance hints at heightened challenges within this sector.
