Microsoft beats Q2 earnings and revenue, but stock falls on ballooning capex
Microsoft released its second-quarter earnings on Wednesday.
Microsoft beat on second-quarter earnings and revenue, but shares fell in after-hours trading as its capex soared.
The company posted $81.3 billion in revenue for the quarter, topping analysts’ expectations of $80.31 billion. And it reported earnings per share of $4.14, above analysts’ consensus estimate of $3.91.
Still, investors were nonplussed, sending the stock down 4.2% just after the report.
Capital expenditure for the quarter was $37.5 billion, up 66% year on year and ahead of analysts’ consensus forecast of $36.6 billion. Hyperscalers have been boosting their capital spending as they pour money into data centers required to fuel their AI ambitions.
Demand was so high for Azure cloud computing that Microsoft’s backlog of commercial bookings (known as RPO) grew $110% to $625 billion, though 45% of that was driven by commitments from OpenAI. The company didn’t break out what percentage of its RPO was attributed to OpenAI in the first quarter, when its RPO totaled $298 billion.
The company’s huge investment in OpenAI also drove gains in the company’s net income, with its stake boosting profit by $7.6 billion.
Breaking down the results by the company’s business lines:
☁️ 🤖 “Intelligent Cloud” (Azure, server products): $32.9 billion in revenue, up 29% year on year.
📝 📊 “Productivity and Business Processes” (Microsoft 365, LinkedIn, Dynamics): $34.1 billion in revenue, up 16% year on year.
💻 🎮 “More Personal Computing” (Windows, Xbox, Bing): $14.3 billion in revenue, down 3% year on year.
