Microsoft's AI-powered cloud business, Azure, grew 29% in the last quarter, below what most analysts were looking for — and a slowdown from the 31% growth seen in the previous period.
Why it matters: Microsoft's results are the latest test for Big Tech around AI monetization.
By the numbers: The company's Intelligent Cloud segment, which includes the Azure public cloud, generated $28.5 billion in the quarter, up 19% — but disappointing investors.
- Shares fell as much as 7.8% after the bell following the report.
- A ripple effect was felt among other names in the Magnificent Seven, with Alphabet, Meta and Apple shares also slipping in after-hours trading.
Meanwhile, Microsoft continued to spend more itself, largely on AI-related initiatives.
- It spent $19 billion on total capex in the quarter, up 78% from a year ago and 36% from the last quarter.
- Alphabet (about $12 billion last quarter), Meta (reporting tomorrow), and Apple and Amazon (reporting Thursday) are also making huge investments in AI — and there's already some skepticism about whether they'll ever get the necessary levels of revenue to justify it, Axios' Kia Kokalitcheva writes.
The intrigue: Microsoft's Azure cloud service suffered an outage today, which the company attributed to an "unexpected usage spike."
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