Investing.com - Microsoft sinked in after-hours trading Tuesday after its fourth-quarter cloud revenue growth fell short of Wall Street estimates even as the tech giant ramped up spending on investments to boost growth.
Microsoft Corporation (NASDAQ:MSFT) was down more than 5% afterhours trading following the report.
The company announced earnings per share of $2.95 on revenue of $64.7 billion. Analysts polled by Investing.com anticipated EPS of $2.94 on revenue of $64.38B.
Azure, Microsoft's cloud business grew 29%, missing analyst estimates of 30.2%. That also marked a slowdown from 31% growth seen in Q3. Azure is widely viewed as a barometer for AI demand. AI-related growth accounted for about 8% of Azure's total growth, up from 7% in Q3.
Signs of slowing cloud growth come even as Microsoft continues to ramp up investments, with capital spending jumping to $19B in Q4, up from $14B in Q3, and nearly double the $10.7B seen in Q4 a year ago.
Revenue in productivity and business processes rose 11% to $20.3B as official commercial products and cloud services revenue climbed 12%.
Revenue in more personal computing was up 3% to $11 billion, with Windows revenue up 7%.
"Shares traded lower after hours following Intelligent Cloud segment revenue missing consensus, as Azure growth decelerated 1 point, missing buyside expectations and coming in at the low end of guidance," RBC (TSX:RY) said in a note following the results.