Microsoft shares drop as cloud growth misses estimates but spending grows

Microsoft said earlier on Wednesday it had added DeepSeek, the breakout Chinese artificial intelligence model, to its offerings on Azure.

Microsoft reported slower-than-expected growth in its crucial Azure cloud business on Wednesday despite beating estimates for overall quarterly revenue, sending its shares down 4% in extended trading.

Microsoft's cloud unit Azure reported revenue growth of 31% in the quarter, missing Visible Alpha estimates of 31.8%.

Microsoft's capital expenditures hit $22.6 billion, above analysts' consensus estimate of $20.95 billion, according to data from Visible Alpha.

Microsoft said earlier on Wednesday it had added DeepSeek, the breakout Chinese artificial intelligence model, to its offerings on Azure.

At the company's Intelligent Cloud unit, which includes the Azure platform, revenue rose to $25.54 billion, missing expectations of $25.76 billion.

Total revenue rose 12% to $69.6 billion in the fiscal second quarter ended December, compared with analysts' average estimate of $68.78 billion, according to data compiled by LSEG.

Redmond, Washington-based Microsoft reported a profit of $3.23 per share, beating expectations of $3.11 per share.