Software giant Microsoft (MSFT) late Wednesday beat Wall Street’s targets for its fiscal first quarter thanks to strength in cloud computing and AI services. But Microsoft stock fell in extended trading.
The Redmond, Wash.-based company earned an adjusted $4.13 a share on sales of $77.67 billion in the quarter ended Sept. 30. Analysts polled by FactSet had expected Microsoft to earn $3.67 a share on sales of $75.38 billion. On a year-over-year basis, Microsoft earnings rose 23% while sales increased 18%.
The company’s adjusted earnings exclude the impact of investments in OpenAI. Under generally accepted accounting principles, which include OpenAI, Microsoft earned $3.72 a share, up 13%, in fiscal Q1.
Microsoft’s Azure cloud computing business saw revenue increase 40% year over year, beating the consensus estimate for 38% growth. On a constant-currency basis, Azure revenue rose 39% in fiscal Q1.
Based on the midpoint of its outlook, Microsoft expects December-quarter revenue of $80.05 billion, vs. the consensus estimate of $80.08 billion. Its guidance would represent a year-over-year sales increase of 15%.
Further, Microsoft expects Azure growth of 37% in constant currency in the fiscal second quarter.
Microsoft Stock Slides Late
In after-hours trading on the stock market today, Microsoft stock sank 3.7% to 521.72. During the regular session Wednesday, Microsoft stock dipped a fraction to close at 541.55.
Microsoft stock is in a cup base with a buy point of 555.45, according to IBD MarketSurge charts. That buy point is also the stock’s all-time high, reached on July 31 after Microsoft posted its fiscal fourth-quarter results.
“Our planet-scale cloud and AI factory, together with Copilots across high-value domains, is driving broad diffusion and real-world impact,” Chief Executive Satya Nadella said in a news release. “It’s why we continue to increase our investments in AI across both capital and talent to meet the massive opportunity ahead.”
Microsoft Cloud revenue rose 26% to $49.1 billion in the September quarter and commercial remaining performance obligations increased 51% to $392 billion.
Microsoft stock is on two IBD lists: Long-Term Leaders and Tech Leaders.
Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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