{"id":228297,"date":"2025-01-31T03:25:31","date_gmt":"2025-01-31T03:25:31","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2025\/01\/31\/microsoft-shares-slide-as-cloud-forecast-ai-spending-disappoint\/"},"modified":"2025-01-31T03:25:32","modified_gmt":"2025-01-31T03:25:32","slug":"microsoft-shares-slide-as-cloud-forecast-ai-spending-disappoint","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2025\/01\/31\/microsoft-shares-slide-as-cloud-forecast-ai-spending-disappoint\/","title":{"rendered":"Microsoft Shares Slide as Cloud Forecast, AI Spending Disappoint"},"content":{"rendered":"
\"Microsoft<\/div>


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Microsoft\u00a0on Wednesday\u00a0forecast\u00a0disappointing growth in its\u00a0cloud\u00a0computing business, sending its\u00a0shares\u00a0down 4.5 percent in after-hours trading as investors worry about big\u00a0spending, elusive artificial intelligence revenue and competition from cheaper\u00a0AI\u00a0models from China.<\/p>\n

Azure<\/a> results for the fiscal second quarter also fell below Wall Street expectations. Despite beating quarterly overall sales estimates, investors want better results from the hundreds of billions of dollars that Wall Street heavyweights have been\u00a0spending\u00a0to build\u00a0AI\u00a0data centers and infuse their products with the emerging technology.<\/p>\n

Chinese rivals have recently claimed to produce competing\u00a0AI\u00a0technologies at lower costs than US rivals, sparking fears of a price war. For more than a year,\u00a0Microsoft<\/a>\u00a0and its Big Tech peers have tested Wall Street’s patience by plunking down huge amounts of cash in pursuit of profits from\u00a0AI\u00a0that have yet to satisfy investors.<\/p>\n

“It’s OK if that is a few years out, three to five years into the future,” said Brian Mulberry, portfolio manager at Zacks Investment Management. “But we really want to start to see a clear road map to what that monetisation model looks like for all of the capital that’s been invested.”<\/p>\n

On a conference call with investors, Chief Executive Satya Nadella<\/a> said costs were coming down, with models showing 10 times better performance for the price as\u00a0Microsoft\u00a0irons out the algorithms.<\/p>\n

“As\u00a0AI\u00a0becomes more efficient and accessible, we will see exponentially more demand,” Nadella said.<\/p>\n

Microsoft\u00a0Chief Financial Officer Amy Hood said Azure would grow between 31 percent and 32 percent in the current fiscal third quarter, below the 33 percent Wall Street expects, according to data from Visible Alpha.<\/p>\n

Microsoft’s Azure unit reported revenue growth of 31 percent in the quarter, missing Visible Alpha estimates of 31.8 percent.\u00a0Microsoft’s capital expenditures hit $22.6 billion (roughly Rs. 1,95,683 crore), above analysts’ consensus estimate of $20.95 billion (roughly Rs. 1,81,396 crore), according to data from Visible Alpha.<\/p>\n

DeepSeek’s meteoric rise in the past three weeks has sparked worries of stiff competition that could force leading US AI\u00a0providers to slash prices.<\/p>\n

Microsoft\u00a0said earlier on Wednesday it had added DeepSeek, the breakout Chinese\u00a0AI\u00a0model, to its offerings on Azure.\u00a0Microsoft\u00a0said\u00a0AI\u00a0contributed 13 percentage points of Azure’s growth in its fiscal second quarter, up from 12 percentage points the previous quarter.<\/p>\n

Responding to questions from analysts, Nadella said\u00a0Microsoft\u00a0was\u00a0spending\u00a0to build out data centers to develop\u00a0AI\u00a0models and offer them to customers.\u00a0Microsoft\u00a0is working to make those services more cost efficient, he added.<\/p>\n

“We are working super hard on all the software optimizations – not just the optimizations that have come because of what DeepSeek has done, but all the work we have done to reduce the prices of GPT models over the years in partnership with OpenAI,” Nadella said.<\/p>\n

“In fact, we did a lot of the work on the inference optimisations on it, and that’s been key to driving it.”<\/p>\n

Overall, investors still appear to view\u00a0Microsoft\u00a0as a leading bet on\u00a0AI. Its stock has gained about eight percent over the past year, trailing a 29 percent rally in Alphabet and a 50 percent surge in Amazon. It is trading at about 32 times expected earnings, slightly above its five-year average of 30, according to LSEG.<\/p>\n

Microsoft\u00a0also posted 67 percent growth in what it calls commercial bookings, a measure of new contracts signed with large customers.<\/p>\n

Brett Iversen,\u00a0Microsoft’s vice president of investor relations, said that figure was mostly driven by large new Azure contracts with OpenAI.<\/p>\n

While OpenAI\u00a0announced a new data center deal with Oracle last week,\u00a0Microsoft\u00a0still retains the rights to most of the hosting of OpenAI’s models for commercial purposes.<\/p>\n

At the company’s Intelligent\u00a0Cloud\u00a0unit, which includes the Azure platform, revenue rose to $25.54 billion (roughly Rs. 1,77,836 crore), missing expectations of $25.76 billion (roughly Rs.\u00a01,79,751 crore)<\/p>\n

Total revenue rose 12 percent to $69.6 billion (roughly Rs.\u00a06,02,635 crore) \u00a0in the fiscal second quarter ended December, compared with analysts’ average estimate of $68.78 billion (roughly Rs. 5,95,562 crore), according to data compiled by LSEG.<\/p>\n

Redmond, Washington-based\u00a0Microsoft\u00a0reported a profit of $3.23 (roughly Rs. 280) per share, beating expectations of $3.11 (roughly Rs. 270) per share.<\/p>\n

\u00a9 Thomson Reuters 2025<\/em><\/p>\n

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)<\/i><\/p>\n<\/div>\n


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Microsoft\u00a0on Wednesday\u00a0forecast\u00a0disappointing growth in its\u00a0cloud\u00a0computing business, sending its\u00a0shares\u00a0down 4.5 percent in after-hours trading as investors worry about big\u00a0spending, elusive artificial intelligence revenue and competition from cheaper\u00a0AI\u00a0models from China. Azure results for the fiscal second quarter also fell below Wall Street expectations. Despite beating quarterly overall sales estimates, investors want better results from the hundreds of […]<\/p>\n","protected":false},"author":2,"featured_media":228298,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","fifu_image_url":"https:\/\/i.gadgets360cdn.com\/large\/microsoft_logo_reuters_1724477981905.jpg","fifu_image_alt":"","footnotes":""},"categories":[607],"tags":[1274,36790,2698,9478,10233,1099,178986,33317,1253,11479,2436],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/228297"}],"collection":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/comments?post=228297"}],"version-history":[{"count":1,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/228297\/revisions"}],"predecessor-version":[{"id":228299,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/228297\/revisions\/228299"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media\/228298"}],"wp:attachment":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media?parent=228297"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/categories?post=228297"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/tags?post=228297"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}