Microsoft Corp. released its earnings for the second quarter of fiscal year 2025, ended December 31, 2024. Overall, revenue and profits exceeded Wall Street expectations, although cloud revenue slightly missed forecasts. Cloud-related factors are driving the company's after-hours stock reaction. Shares are down as much as 5%, also dragging down Amazon, which has a similar cloud business to Microsoft, by more than 1%. Key growth driver for Microsoft was the strong growth in the artificial intelligence segment.
Key Data:
Start investing today or test a free demo
Open real account TRY DEMO Download mobile app Download mobile app- Revenue: $69.6 billion (up 12%), above consensus of $68.81 billion.
- Operating Income: $31.7 billion (up 17%).
- Net Income: $24.1 billion (up 10%).
- EPS: $3.23 (up 10%), beating expectations of $3.11.
- Microsoft Cloud Revenue: $40.9 billion (up 21%), missing expectations of $41.1 billion.
- Intelligent Cloud Revenue: $25.5 billion (up 19%), missing expectations of $25.89 billion.
- Azure and Other Cloud Services Revenue: Up 31% (ex-FX), in line with expectations.
- Productivity and Business Processes Revenue: $29.4 billion (up 14%).
- More Personal Computing Revenue: $14.7 billion (flat).
- AI Revenue: Exceeded $13 billion annual run rate, up 175% year-over-year.
Management Commentary:
- CEO Satya Nadella: "We are innovating across our products and helping customers unlock the full return on their AI investments (...). Already, our AI business has exceeded a $13 billion annual revenue run rate, up 175% year-over-year."
- CFO Amy Hood: "This quarter, Microsoft Cloud revenue was $40.9 billion, up 21% year-over-year. We remain committed to balancing operational discipline with continued investments in our cloud and AI infrastructure."
Microsoft delivered solid results, driven primarily by strong growth in the artificial intelligence segment. AI is important, but of course, given recent events surrounding DeepSeek, further such dynamic growth in this segment is in question. Therefore, disappointment from the cloud perspective (albeit still with strong growth), is causing a price decline. The company emphasizes its commitment to further investment in this area.
The company's stock has been in consolidation since August. With a decline during tomorrow's session of about 5%, the company may find itself at its lowest level since mid-January and at the same time even above 10% from its historic highs of July 2024. As you can see, the company has been doing worse in recent months compared to the growth of the Nasdaq (US100).
The material on this page does not constitute as financial advice and does not take into account your level of understanding, investment objectives, financial situation or any other particular needs.
All the information provided, including opinions, market research, mathematical results and technical analyses published on the website or transmitted to you by other means is provided for information purposes only and should in no event be interpreted as an offer of, or solicitation for, a transaction in any financial instrument, nor should the information provided be construed as advice of legal or fiscal nature.
Any investment decisions you make shall be based exclusively on your level of understanding, investment objectives, financial situation or any other particular needs. Any decision to act on information published on the website or transmitted to you by other means is entirely at your own risk. You are solely responsible for such decisions.
If you are in doubt or are not sure that you understand a particular product, instrument, service, or transaction, you should seek professional or legal advice before trading.
Investing in OTC Derivatives carries a high degree of risk, as they are leveraged based products and often small movements in the market could lead to much larger movements in the value of your investment and this could work against you or for you. Please ensure that you fully understand the risks involved, taking into account your investments objectives and level of experience, before trading, and if necessary, seek independent advice.
