Microsoft shares down after Q1

[MongiIG]

Software giant Microsoft disappointed the markets as its cloud business, Azure, saw a slowdown in growth, despite expanding 26%. Sales of software for personal computing fell 15%.

 Jeremy Naylor | Writer, London | Publication date: Wednesday 26 October 2022

Microsoft's fiscal first quarter (Q1) last night beat analyst expectations at the top and the bottom line despite cloud sales growth falling to 20% year-over-year (YoY), which saw shares down 5% in extended trade on the IG platform last night.

These were the numbers coming through from Microsoft's earnings per share (EPS - $2.35. Estimates had been for $2.32. So tick box there. Revenues of $50.1 billion. We've been looking for something just shy of the $50 billion level.

Share price chart

But, Microsoft warned of a marked slowdown in its cloud computing businesses. Large customers pause their spending in the face of a slowing economy and look what damage it did to shares yesterday.

You can see quite clearly in extended trade on the IG platform last night all the way down. $233.92 back into this sloping channel that we've been trading in productivity and business processes. $16.5 billion against $16.1 billion expected.

But it was the cloud business which really did spook the markets last night. This is the Azure business of Microsoft, intelligent cloud business nonetheless rising 26%. But that met estimates of $20.3 billion but sales of software to PC-makers falling 15%, leaving overall revenue from Microsoft's more personal computing division at $14.3 billion, close to forecast.

The end effect of all that was a drop for Microsoft when it closed out yesterday's session, all extended trade on the IG platform.