Microsoft Corp. shares slipped in after-hours trading Tuesday despite an earnings beat, as the company’s cloud-computing revenue came in lower than expected and its core cloud product, Azure, grew at a slower rate than projections. Microsoft’s
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cloud-computing business has grown into the largest and most important business for the company, especially for investors who like Azure’s high margins and strong growth. There have been concerns about cloud growth as the U.S. faces its first possible recession since the technology became ubiquitous, and Azure’s growth in Tuesday’s report was the slowest Microsoft has reported in the past two years, while Microsoft’s cloud division was the only segment to come in lower than estimates.
The “Intelligent Cloud” segment reported first-quarter revenue of $20.3 billion, up from $16.96 billion a year ago but slightly lower than the average analyst estimate tracked by FactSet of $20.46 billion. Microsoft said that Azure grew by 35%, while analysts on average were expecting 36.5% growth, according to FactSet. Opinion: The cloud boom is coming back to Earth, and that could be scary for tech stocks That is a marked slowdown from Azure’s 40% growth rate in the previous quarter, as well as the 50% growth shown in the same quarter last year. Microsoft only reports percentage growth for its core cloud-computing product, even as main rivals Amazon.com Inc.
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and Alphabet Inc.
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report revenue and profit margin for their cloud-computing products. Overall, Microsoft
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reported fiscal first-quarter earnings of $17.56 billion, or $2.35 a share, down fro …