- Microsoft reported second-quarter earnings late Wednesday.
- The company’s AI and cloud computing sales results were lower than analysts expected.
- Microsoft’s stock was one of several hit after DeepSeek’s AI model announcement on Monday.
Microsoft’s earnings on Wednesday showed strong growth in its AI business — just not enough to reassure investors.
Sales tied to Azure and other cloud computing grew 31% in fiscal Q2, slightly slower than the 31.8% analysts surveyed by Bloomberg estimated.
Meantime, CEO Satya Nadella said, “Already, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year.”
Microsoft is “innovating across our tech stack and helping customers unlock the full ROI of AI to capture the massive opportunity ahead,” he commented.
Shares of Microsoft fell as much as 4% in after-hours trading on Wednesday.
Tech executives, including Nadella, were expected to face scrutiny this earnings cycle about spending billions of dollars to build AI capabilities — and the returns from it. That pressure has been stepped up after Chinese company DeepSeek debuted a model that appears comparable to US rivals but seemingly costs less to train.
Microsoft was one of several companies whose stocks fell on Monday after DeepSeek revealed its model. It has a multibillion-dollar investment in OpenAI. The selloff took a collective $1 trillion off US companies’ market caps.
