TECHNOLOGY: US Earnings: Microsoft Earnings Beat, Azure Growth Disappoints
MSFT Aaa/AAA
From our DM team last night; equity indicating -5% though not a spread mover given the credit quality.
• Microsoft reported Q2 FY25 earnings that exceeded revenue and EPS estimates but disappointed on Azure growth, leading to a post-market decline of over 5%. Revenue rose 12% YoY to $69.6B (est. $68.9B), with EPS at $3.23 (est. $3.11). Cloud revenue grew 21% to $40.9B, but Azure's 31% YoY growth missed the 31.8% estimate and slowed from the prior quarter’s 34%. Capex surged to $15.8B, reflecting heavy AI investments, with management signaling continued spending growth. While Microsoft’s AI-driven revenue hit a $13B annualized run rate (+175% YoY), concerns over monetization timelines and rising competition, especially from cost-efficient AI models like DeepSeek has added pressure.