Microsoft Corp (NASDAQ:MSFT) shares are set for further losses, with the stock down 4% premarket, after higher-than-expected investment spending unsettled investors. The drop follows concerns over AI-related costs and comes just days after DeepSeek's rise shook the tech sector.
Investors were looking to Microsoft and Meta to provide reassurance that they will keep spending heavily on Nvidia chips.
Microsoft said Wednesday that its profit for the October-December quarter grew 10% as it works to capitalize on the huge amounts of money it has spent to advance its artificial intelligence technology.
Microsoft's 5% stock sell-off is an overreaction; 40x next year's non-GAAP operating profits is high but justified by its strong management and capital deployment. Investors should focus on Microsoft's long-term potential and not be swayed by short-term capex concerns or slightly light fiscal Q2 2025 guidance. Microsoft's diverse revenue streams and ability to adapt capex investments ensure continued mid-teens revenue growth and robust free cash flow generation.
Microsoft shares fell in Europe on Thursday after it issued a downbeat forecast for its cloud business, while Facebook parent Meta shares rose after beating expectations, as investors scrutinised the companies' spending on artificial intelligence.
Microsoft Corp. investors focused on the company's disappointing revenue of its Azure cloud business on Wednesday, but they should also be looking at another number indicative of future growth: bookings.
Days after Chinese upstart DeepSeek revealed a breakthrough in cheap AI computing that shook the U.S. technology industry, the chief executives of Microsoft and Meta defended massive spending that they said was key to staying competitive in the new field.
Microsoft (MSFT) shares moved lower in late-Wednesday trading as the tech giant reported fiscal second-quarter Intelligent Cloud revenue that missed analysts' expectations.
Microsoft Corporation (NASDAQ:MSFT ) Q2 2025 Earnings Conference Call January 29, 2025 5:30 PM ET Company Participants Brett Iversen - Vice President of Investor Relations Satya Nadella - Chairman and Chief Executive Officer Amy Hood - Executive Vice President and Chief Financial Officer Conference Call Participants Keith Weiss - Morgan Stanley Mark Moerdler - Bernstein Research Brent Thill - Jefferies Karl Keirstead - UBS Brad Zelnick - Deutsche Bank Brad Reback - Stifel Bradley Sills - Bank of America Brent Bracelin - Piper Sandler Operator Greetings and welcome to the Microsoft Fiscal Year 2025 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode.
While the top- and bottom-line numbers for Microsoft (MSFT) give a sense of how the business performed in the quarter ended December 2024, it could be worth looking at how some of its key metrics compare to Wall Street estimates and year-ago values.
Microsoft, Meta, IBM and ServiceNow all outperformed earnings estimates, while Tesla came up short.
Microsoft (MSFT) came out with quarterly earnings of $3.23 per share, beating the Zacks Consensus Estimate of $3.11 per share. This compares to earnings of $2.93 per share a year ago.