Q2 earnings were released after market this morning, and the results were mixed; the shares are trading down ~5% after hours.
Revenue for the quarter was an impressive $64.73bn, up 15% year on year and slightly ahead of consensus of $64.39bn, while earnings per share (EPS) at $2.95 was a touch ahead of $2.93 expected – no dramas there. The issue the market will focus on is a slowdown in their Cloud business, which includes Azure, Windows Server, Nuance, and GitHub. Combined, they generated $28.52bn in revenue, below the $28.68bn expected, implying growth of 29%, which was below the 31% tipped.
AI is contributing to Growth in Azure. Specifically, they said that 8 percentage points of Azure’s 29% growth came from AI services. However, it’s a competitive space, with MSFT up against Amazon Web Services and Google. It also requires a lot of capital, and as Google and others have highlighted, patience is going to be required here—earnings just don’t materialise.
MM remains long MSFT US
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