In its fiscal second quarter, Microsoft exceeded Wall Street's expectations, driven by a thriving artificial intelligence (AI) sector. Despite this success, the company's stock dipped during after-hours trading due to slower growth in its Azure cloud services. The software giant reported earnings of $3.23 per share on revenues of $69.6 billion for the December quarter. Analysts had anticipated earnings of $3.11 per share on sales of $68.9 billion. Compared to the previous year, Microsoft's earnings grew by 10%, while sales increased by 12%. CEO Satya Nadella highlighted the company's focus on maximizing AI's return on investment and emphasized the significant opportunities ahead.
The Intelligent Cloud division experienced a 19% revenue boost to $25.5 billion in the fiscal second quarter. Meanwhile, the Productivity and Business Processes segment saw a 14% increase to $29.4 billion. The More Personal Computing unit remained relatively stable with revenues of $14.7 billion. CFO Amy Hood noted that Microsoft Cloud generated $40.9 billion in revenue, marking a 21% year-over-year increase. However, Azure's revenue growth slowed to 31% in the December quarter, down from 34% in September and 35% in June. This deceleration contributed to Microsoft's stock decline in extended trading sessions.
Azure's performance has been a key indicator of Microsoft's cloud strategy. While the company remains committed to balancing operational efficiency with strategic investments in cloud and AI infrastructure, investors are closely watching Azure's trajectory. Nadella stated that Microsoft's AI business has surpassed an annual revenue run rate of $13 billion, representing a 175% year-over-year surge. This rapid expansion underscores the growing importance of AI in Microsoft's overall portfolio.
The stock market reacted cautiously to these developments. During regular trading hours, Microsoft shares closed at $442.33, down 1.1%. In after-hours trading, the stock slid further, dropping more than 1% to $435.03. Investors are also keeping an eye on the broader market trends and Microsoft's position within them. According to IBD MarketSurge charts, Microsoft is currently in a 30-week consolidation phase, with potential buy points identified at $468.35 and $456.16 based on different analytical models.
Despite the challenges, Microsoft continues to be a leader in long-term portfolios. The company's commitment to innovation and strategic investments in AI and cloud computing positions it well for future growth. Investors remain optimistic about the vast opportunities that lie ahead as Microsoft continues to push boundaries in technology and business processes.