Software giant Microsoft late Tuesday reported fiscal fourth-quarter results that edged above Wall Street's targets. But Microsoft stock fell in extended trading as Azure cloud-computing growth disappointed. Also, Microsoft's sales guidance for the current quarter was light.
The Redmond, Wash.-based company earned $2.95 a share on sales of $64.7 billion in the quarter ended June 30. Analysts polled by FactSet had expected Microsoft earnings of $2.94 a share on sales of $64.4 billion. On a year-over-year basis, Microsoft earnings increased 10% while sales rose 15%.
However, sales growth in Microsoft's Azure cloud infrastructure business was 30% in constant currency. That lagged estimates for 31.3%. It also slowed from 31% growth in the March quarter, FactSet reported.
For the current quarter, Microsoft forecast Azure revenue growth of 28% to 29% in constant currency.
"We closed out our fiscal year with a solid quarter, highlighted by record bookings and Microsoft Cloud quarterly revenue of $36.8 billion, up 21% (up 22% in constant currency) year over year," Chief Financial Officer Amy Hood said in a news release.
For the current quarter, Microsoft forecast sales of $63.8 billion to $64.8 billion. The midpoint of $64.3 billion is below the consensus estimate of $65.1 billion for the September quarter, according to FactSet.
Microsoft Stock Retreats After Report
In after-hours trading on the stock market today, Microsoft stock fell 3.4% to 408.76. During the regular session Tuesday, Microsoft stock sank 0.9% to close at 422.92.
Microsoft's capital expenditures, most of it for AI data centers, was higher than expected in the June quarter, CFRA Research analyst Angelo Zino said. That figure "could also be weighing on negative sentiment," Zino said in a client note.
Capital expenditures were $19 billion in the June quarter. That compares with $14 billion in the March quarter. Microsoft and its Big Tech peers are spending heavily on data centers to support generative artificial intelligence.
For the full fiscal year, Microsoft spent $55.7 billion on capex, up 75% from the prior year. And Microsoft expects to spend more on capex in fiscal 2025 than it did in the just-finished fiscal 2024, Hood said.
MSFT Stock Is On Two IBD Lists
Of Microsoft's three business units, Intelligent Cloud was the top performer in the June quarter. Revenue in the segment increased 19% to $28.5 billion. The unit includes server products and cloud services such as Azure.
Microsoft's Productivity and Business Processes unit saw sales rise 11% to $20.3 billion. The division includes Office productivity software as well as the Dynamics and LinkedIn businesses.
Lastly, Microsoft's More Personal Computing unit saw sales increase 14% to $15.9 billion. The unit includes Windows PC software, Xbox video games, Surface computers, internet search and advertising.
Microsoft stock is on two IBD lists: Long-Term Leaders and Tech Leaders.
On July 5, Microsoft hit a record high of 468.35. But shares tumbled amid an investor rotation out of tech stocks.
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