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Microsoft’s unexpected rebound in Azure cloud growth lifts shares

Wall Street had expected a slowdown as customers seek greater efficiency
Microsoft reported revenue of $56.5bn in the third quarter © Reuters

Microsoft reported revenue of $56.5bn in the third quarter © Reuters

Microsoft registered an unexpected rebound in growth in its Azure cloud computing platform during the third quarter, bringing a 5 per cent bounce in shares in after-market trading on Tuesday.

Wall Street had been expecting a further cloud slowdown following the 27 per cent constant-currency growth of the preceding quarter, as customers continue to squeeze more efficiency out of their existing cloud spending. But growth in Azure revenue instead rebounded to 29 per cent, or 28 per cent excluding the effects of currency movements, helping to lift overall revenue and earnings well ahead of forecasts.

Microsoft had forecast that generative AI would add 2 percentage points to its cloud growth in the period, helping to counter the pressure caused by customers “optimising” their other cloud spending.

The company was expected to give more details about the demand for new AI services in a call with investors later on Tuesday, along with its forecast for the state of the cloud business in the current quarter.

Overall, Microsoft reported revenue of $56.5bn, an increase of 13 per cent from a year ago, while earnings per share rose 27 per cent to $2.99. Wall Street had been expecting earnings of $2.65 a share on revenue of $54.5bn.

Author: Editors Desk

Source: Financial Times

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