Microsoft reported strong earnings, but that wasn’t enough to satisfy Wall Street at an unusually tense time for investors in big technology companies, as worse-than-expected effects on its synthetic intelligence business sent Microsoft shares higher.
The headlines were strong for Microsoft, which beat cash revenue and profit forecasts: Microsoft reported consistent diluted cash revenue of $2. 95 for the 3 months ended June 30, which is just above from the analyst consensus forecast of $2. 94, up 10% year over year. during the year. -year, while its quarterly sales of $64. 7 billion beat estimates of $64. 4 billion, a 15% year-over-year increase.
Still, Microsoft shares fell about 7% after the earnings announcement, and have already suffered a drop of more than 8% in the last three weeks.
The drop came as the expansion of Microsoft’s critical AI business was worse than expected: The 29% expansion of its Azure cloud computing unit missed forecasts of 31%, and sales of its intelligent cloud department with great AI were $28. 5 billion, below estimates. . $28. 7 billion.
Microsoft’s after-hours inventory below $400 would be its lowest intraday point since May 2, while its 7% drop would be its worst day since October 2022, after-hours trading tends to generate more volatility.
The latest quarter was by far Microsoft’s most lucrative, breaking the previous record of $62. 02 billion set in the quarter ending last December and ending Microsoft’s fiscal year on a high note. Microsoft’s net profit of $88. 1 billion ($11. 80 profit consistent with participation) in its fiscal year from July 2023 to June 2024 broke the previous record of $72. 4 billion for last year, while its $245. 1 billion in earnings eclipsed the 2023 record of $211. 9. billion. The market’s reaction to Microsoft’s strong overall earnings is similar to that announced last week by Google’s parent company, Alphabet, when its shares fell 5% despite a double hit.
Microsoft’s profit in its fiscal year 2024 is roughly comparable to that of all the economies of Greece and New Zealand last year, based on gross domestic product, which measures the global price of all goods and facilities produced in a single country, which is an achievement for a company whose origins can be traced back to a major school computer club of the 1960s.
A leader in all things technology for decades, Microsoft, a successful but undeniable company, gained momentum in recent years when analysts declared Microsoft the next winner of artificial intelligence enthusiasm. Microsoft’s rapid profit growth from its cloud offerings (operating profit from its AI-heavy cloud unit grew roughly 40% between the quarter ending June 2022 compared to the previous quarter) and its broader positioning through its equity investment in generative AI startup OpenAI helped skyrocket its inventory. Washington stocks S-based companies have risen more than 50% over the past two years, crushing the S’s roughly 30% gain.
Microsoft is part of a wave of tech giants reporting earnings this week, which they joined through Facebook parent Meta on Wednesday afternoon, as did Amazon and Apple on Thursday.
Microsoft is the latest to compete with Apple as the most profitable company in the United States. Rivals dating back to the days when Apple co-founder Steve Jobs and Microsoft co-founder Bill Gates ran their respective corporations as leading executives, Microsoft’s profit of less than $90 billion during its fiscal 2024 is well below the $102 billion projected for Apple. in its fiscal year, however, analysts expect Apple and Microsoft to be more or less on par through 2026. Array projects a net revenue source of $118 billion for Apple and $116 billion for Microsoft, according to consensus estimates compiled through Factset, a far cry from the more than $30 billion. A billion-dollar hole that separated the two men in 2022. Microsoft proved more profitable than Apple in 2010.
A community. Many voices. Create a free account to share your thoughts.
Our network aims to connect others through open and thoughtful conversations. We need our readers to share their perspectives and exchange ideas and facts in one space.
To do this, please comply with the posting regulations in our site’s terms of use. Below we summarize some of those key regulations. In short, civilized.
Your message will be rejected if we realize that it seems to contain:
User accounts will be blocked if we become aware that users are participating in:
So, how can you be a user?
Thank you for reading our Community Standards. Read the full list of publication regulations discovered in our site’s terms of use.