Word Has It Microsoft (MSFT) Cloud Revenue Did Not Excel as Expected, Q1 Outlook Below Consensus but AI Demand Still a Powerful Point

Shares of the Mag 7 software company, Microsoft (MSFT) dropped today on its underwhelming Q4 financial results that came after the close on Wednesday. The company beat quarterly EPS by a penny and on revenues of $64.73B vs FactSet $64.38B. However, cloud revenues in particular, its Intelligent Cloud revenue, which includes its Azure services, fell short, however, posted a 19% increase year-over-year.

Furthering Wall Street’s disappointment was capex which has been a strong point of focus for investors as it relates to AI and tech companies. Microsoft cited its capex for FY’25 to likely exceed FY’24. Analysts had mixed reactions to the recent report and softer Q1 guidance. They were impressed by the overall revenue growth and Azure’s advancements in AI, but concerns lingered over the slower growth of Azure and the rising capital expenditures. The significant increase in FY25 Capex led to debates, with some questioning its efficiency while others pointed to strong demand as justification. However, despite near-term uncertainties, the strong commercial bookings and long-term AI potential kept the overall sentiment bullish.