Microsoft's Xbox Unit Logs 61 Percent Growth, Fuelled by Purchase of Activision-Blizzard
Microsoft Corp.'s Azure cloud-computing service posted a slowdown in quarterly growth, disappointing investors anxious to see a payoff from huge investments in artificial intelligence products. Revenue from Azure, Microsoft's main growth engine in recent years, rose 29 percent in the fiscal fourth quarter, compared with a 31 percent jump in the previous period. About 8 percentage points of the increase in the recent period was attributable to AI, up from seven percentage points in the prior quarter.
“It was really about the cloud services number — it needed to just be a little higher,” Doug Clinton, a managing partner at Deepwater Asset Management, said on Bloomberg Television. Still, the accelerated contribution from AI confirms business momentum with that emerging technology, wrote Raimo Lenschow, an analyst at Barclays.
Chief Executive Officer Satya Nadella has been infusing Microsoft's product line with AI technology from partner OpenAI, including digital assistants called Copilots that can summarise documents and generate computer code, emails and other content. The company also is selling Azure cloud subscriptions featuring OpenAI products. Alongside rivals like Amazon.com Inc. and Google, Microsoft has been spending billions to construct new data centers to meet demand for cloud computing and power-hungry AI services.
On a call with analysts Tuesday, Chief Financial Officer Amy Hood said that although Azure growth will continue to slow in the current quarter, which ends in September, investments in data centers and servers will let the company capitalise on demand and accelerate Azure growth in the second half of fiscal 2025.
Microsoft's shares fell about 4 percent in extended trading, paring earlier losses of as much as 9.1 percent. The stock had closed at $422.92 (roughly Rs. 34,415) in New York, for a gain of 12 percent in 2024.
In the fourth quarter, which ended June 30, capital expenditures — closely watched by investors as the company embarks on its
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