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Microsoft erases gains amid worries over slowdown in cloud business

Microsoft said its third-quarter intelligent cloud revenue would be $21.7 billion to $22 billion, while analysts forecast $22.14 billion.

January 25, 2023 / 08:33 AM IST
Microsoft

Microsoft

Microsoft Corp said revenue growth from its Azure cloud-computing business will fall short of Wall Street expectations and warned of further slowdown in corporate sales, hinting at a steeper decline in demand for the products that have been driving its momentum in recent years.

Microsoft said its third-quarter intelligent cloud revenue would be $21.7 billion to $22 billion, while analysts had forecast $22.14 billion.

Shares erased earlier gains in late trading on Tuesday after Chief Financial Officer Amy Hood said Azure sales in the current period will slow by 4 or 5 points from the end of the fiscal second quarter, when gains were at a percentage in the mid-30s. Cloud was a bright spot in a lacklustre earnings report of the company. Other divisions of the company were held back by a slump in sales related to personal computer software and video games.

Shareholders had earlier sent the stock up more than 4 percent on signs of resilience in Microsoft’s cloud business. The company’s downbeat forecast brought the focus back to its challenges as corporate customers hit the brakes on spending. Revenue growth of 2 percent in the second quarter was the slowest in six years, and Microsoft last week said it’s firing 10,000 workers.