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EQUITIES: Microsoft's Earnings Beat Expectations, Forecast Underwhelms Investors

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Microsoft's Q1 earnings showed strong financial performance, with revenue up 16% to $65.6b, EPS was $3.30, Net Income $24.6b, and EBITDA was $37.93b all beating expectations. However Azure cloud revenue grew 34%, slightly slower than the previous quarter's 35% growth with Microsoft warned of slower cloud growth in the current quarter, forecasting 31%-32% growth in Azure due to delays in expanding data center capacity, driven by high demand for AI services. 

  • Despite heavy investments in AI and cloud infrastructure, with a record $14.9b in capital expenditures, there is concern surrounding the increasing spending on data centers which could pressure margins.
  • Microsoft is also forecasting a $1.5b loss in the next quarter, mainly due to its stake in OpenAI. Investors remain concerned that Microsoft’s AI investments are not yielding returns fast enough.
  • Microsoft's stock fell 4% in after-hours trading, which also led to a sell-off in Nasdaq futures, which were last 0.45% lower.
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Microsoft's Q1 earnings showed strong financial performance, with revenue up 16% to $65.6b, EPS was $3.30, Net Income $24.6b, and EBITDA was $37.93b all beating expectations. However Azure cloud revenue grew 34%, slightly slower than the previous quarter's 35% growth with Microsoft warned of slower cloud growth in the current quarter, forecasting 31%-32% growth in Azure due to delays in expanding data center capacity, driven by high demand for AI services. 

  • Despite heavy investments in AI and cloud infrastructure, with a record $14.9b in capital expenditures, there is concern surrounding the increasing spending on data centers which could pressure margins.
  • Microsoft is also forecasting a $1.5b loss in the next quarter, mainly due to its stake in OpenAI. Investors remain concerned that Microsoft’s AI investments are not yielding returns fast enough.
  • Microsoft's stock fell 4% in after-hours trading, which also led to a sell-off in Nasdaq futures, which were last 0.45% lower.