Microsoft shares drop 8% as cloud revenue miss expectations

Microsoft reported its fiscal fourth-quarter earnings for 2024, revealing better-than-expected revenue and earnings, yet its shares fell 7% in after-hours trading due to disappointing cloud revenue. The company achieved earnings per share of $2.95, slightly above the expected $2.93, and total revenue of $64.73 billion, surpassing the anticipated $64.39 billion. Year-over-year, revenue increased by 15%, with net income rising to $22.04 billion from $20.08 billion in the previous year. The Intelligent Cloud segment, which includes Azure, generated $28.52 billion, up 19% but below the $28.68 billion consensus. Azure and other cloud services saw a 29% growth, falling short of the expected 31%. The Productivity and Business Processes unit, encompassing Office and LinkedIn, reported $20.32 billion in revenue, exceeding the $20.13 billion forecast. The More Personal Computing unit, which includes Windows and gaming, contributed $15.90 billion, also above expectations. The results were bolstered by a recovering PC market, with a 4% increase in Windows license sales. Microsoft has begun selling Surface PCs with AI capabilities, aligning with industry trends. Despite the after-hours decline, Microsoft shares have risen 12% in 2024, compared to a 13% gain in the S&P 500. Executives are set to discuss the results and provide guidance in a conference call later.