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Microsoft’s Cloud ‘Azur’ Growth Slows as Shares Fall – Bloomberg

Microsoft’s Cloud ‘Azur’ Growth Slows as Shares Fall – Bloomberg
Microsoft’s Cloud ‘Azur’ Growth Slows as Shares Fall – Bloomberg

rice Microsoft announced on the 24th that growth in sales of its cloud computing business “Azure” is expected to slow down in the third quarter, and that software sales to enterprises will further slow down. Shares wiped out gains in after-hours trading as concerns grew that demand for cloud products, which have been the driving force behind Microsoft’s momentum in recent years, would drop.

Amy Hood, Chief Financial Officer (CFO), said in a conference call after the earnings announcement that Azure’s sales growth in the January-March quarter was 4.5 percentage points from the mid-30% range in the second quarter of last year. He predicted a slowdown. Azure was a bright spot in its lackluster quarterly results, which suffered from sluggish sales of computer software and video games.

Even with the general softness in the market for high-tech products such as software, the stock price briefly rose more than 4% immediately after the announcement, saying that the results showed the resilience of Microsoft’s cloud business.

Microsoft’s sluggish earnings outlook has rekindled market interest in the company’s challenges in curbing spending by business customers, sending the stock down about 1%. The company’s sales grew 2% in the October-December quarter, the lowest level in six years. The company announced last week that it will cut 10,000 jobs.

Hood said in an interview that the company will continue to invest in long-term opportunities even as it seeks to cut spending on people and real estate. As part of its focus on artificial intelligence (AI), the company announced on the 23rd that it will invest in OpenAI, which handles chatbots such as “ChatGPT.” The company will invest $10 billion over multiple years, according to people familiar with the matter. “We basically believe that the next big wave of platforms will be AI,” CEO Satya Nadella said on Thursday.

The company plans to continue spending to expand its data centers running cloud services. “The investment will be driven by both short-term and long-term cloud demand,” Hood said. “We will continue to invest as cloud demand continues to be strong,” he said. In a conference call with analysts, the bank said it expects capital spending to rise in the first quarter.

Original title: Microsoft Says Azure Cloud Sales to Slow; Shares Erase Gains (2) (excerpt)

(We will update with CFO’s comments and October-December quarter results.)

The article is in Japanese

Tags: Microsofts Cloud Azur Growth Slows Shares Fall Bloomberg

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