The Microsoft Corp (NASDAQ: MSFT) stock price is moving lower in after-hours trading following the release of its FY23 fourth-quarter results.
Although the tech giant beat analyst forecasts, investors appear to be focusing on a caveat to the mostly positive quarterly figures. As a result, shares are trading down 3.7% to US$337.99 apiece. Yet, the personal and cloud-computing provider is still up an impressive 41% since the beginning of the year.
So, how did the fourth quarter play out for the company making a splash in artificial intelligence (AI)?
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Is revenue going on low power mode?
Let's quickly recap the highlights results before fleshing out the details driving the Microsoft stock price.
Here are the key takeaways:
- Revenue up 8% to US$56.2 billion
- Operating income up 18% to US$24.3 billion
- Net income up 20% to US$20.1 billion
- Diluted earnings per share (EPS) up 21% to US$2.69
- Revenue from Azure and other cloud services grew 26%, its highest growth segment
Tempting a tough act as one of the first 'big tech' companies to report in this US earnings season, Microsoft delivered its performance to the market in the early hours of the morning.
Both revenue and earnings came in ahead of what analysts had anticipated. The benchmark for revenue was set at US$55 billion, a figure Microsoft only slightly beat with its US$56.2 billion. Meanwhile, the company's net profits were a more inspiring result, outstripping estimates by roughly 5.8%.
While the 26% growth rate of Microsoft's Azure and cloud segment might look impressive initially, it represents an abrupt slowing. In the prior corresponding period, the cloud area notched up a 40% increase.
Another sour note was the tech company's negative shift in its 'more personal computing' segment. The area encompassing the Windows operating system, devices, search, and gaming experienced a 4% decline in revenue.
The decelerating growth follows news of Microsoft layoffs in Australia earlier this week. It is believed that 50 employees will be cut from the company. This move follows the announced sacking of around 10,000 global workers in January this year.
Can AI turn around the Microsoft stock?
The proliferation of AI is gripping the world, and Microsoft wants to cash in on the action. OpenAI has enabled numerous plugins and features to be integrated into Microsoft's offerings.
Last week, the company revealed plans to monetise its Microsoft Office AI co-pilot. According to the release, the plan is to charge US$30 per person per month across its business customers.
This could be seen as the next growth lever for the Microsoft stock price if the cloud begins running out of steam.
