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 * MSFT Stock Falls as Microsoft Cloud Revenue Disappoints. What’s Going On?


MSFT STOCK FALLS AS MICROSOFT CLOUD REVENUE DISAPPOINTS. WHAT’S GOING ON?




InvestorPlace
Jul. 31, 2024, 07:51 AM










InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Microsoft (NASDAQ:MSFT) stock is falling 2% in early trading, and the shares are
trending on social media and business news websites this morning. The company
reported its fiscal fourth-quarter results yesterday after the market closed,
and investors focused on the revenue of its cloud unit, which came in slightly
below analysts’ average outlook. In the wake of the news, some commentators
labeled Microsoft stock “another AI disappointment.”

On a positive note, the tech conglomerate’s overall Q4 results did surpass
analysts’ overall estimates.


CLOUD REVENUE’S SMALL MISS AND OVERALL BEAT

The sales of Microsoft’s cloud-computing unit, Azure, increased 29% last quarter
versus the same period a year earlier. The firm had previously forecast that
Azure’s revenue would climb 30%-31%, excluding currency fluctuations, and some
analysts had called for the unit’s revenue to increase more than 30%. The firm
noted that, excluding currency changes, Azure’s sales had risen 30%
year-over-year (YOY) in the quarter that ended in June.

Meanwhile, the firm noted that “AI services” had boosted “its Azure and other
cloud services revenue” by eight percentage points YOY. The latter data point
shows that AI is indeed contributing meaningfully to the firm’s financial
results.






The software giant generated earnings per share of $2.95 last quarter versus
analysts’ average estimate of $2.94. Its top line came in at $64.7 billion,
above the mean estimate of $64.5 billion.


MSFT STOCK: WHAT TO WATCH GOING FORWARD

The owners of MSFT stock should try to determine the extent to which stronger
demand for Microsoft’s AI software and services is likely to lift the firm’s
financial results. They should also keep an eye on the overall growth of the PC
and cloud computing sectors since Microsoft’s financial results are closely tied
to the performance of those two sectors.

Heading into today, the shares had dropped 8% in the last month, but they were
up 12.5% in 2024.

On the date of publication, Larry Ramer did not hold (either directly or
indirectly) any positions in the securities mentioned in this article. The
opinions expressed in this article are those of the writer, subject to the
InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly
or indirectly) any positions in the securities mentioned in this article.






Larry Ramer has conducted research and written articles on U.S. stocks for 15
years. He has been employed by The Fly and Israel’s largest business newspaper,
Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly
successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on
Stocktwits at @larryramer.


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The post MSFT Stock Falls as Microsoft Cloud Revenue Disappoints. What’s Going
On? appeared first on InvestorPlace.




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