Microsoft’s stock fell 4.5% in after-hours trading after the company forecasted lower-than-expected growth for its cloud computing business, Azure. Despite beating overall revenue estimates, investors remain concerned about heavy capital expenditures, slow AI monetization, and increasing competition from cheaper Chinese AI models. The company’s capital spending exceeded analyst projections, adding to worries about profitability.
Competition from Chinese AI firms, particularly DeepSeek, has sparked concerns over a potential price war, further pressuring Microsoft and other U.S. tech giants to cut prices. CEO Satya Nadella reassured investors that AI efficiencies would drive future demand, while CFO Amy Hood projected Azure’s growth at 31-32%, slightly below Wall Street’s 33% estimate. Meanwhile, Microsoft’s cloud revenue of $25.54 billion fell short of expectations.
Despite these concerns, Microsoft remains a strong player in the AI sector, with its stock gaining 8% in the past year. The company posted a 67% growth in commercial bookings, largely driven by Azure contracts with OpenAI. However, competition from rivals like Alphabet and Amazon, which have seen stronger stock performance, raises questions.
Source: REUTERS