(Jason Redmond/Getty Images)

An AI business boost was no panacea for Microsoft

The stock was down over 7% in after-hours trading after the company reported weaker-than-expected growth in its Azure cloud business.

Yiwen Lu

7/30/24 6:54PM

Microsoft’s investments in AI are starting to pay off. The trouble was, this wasn’t enough to offset the slowdown in growth for cloud services during the past quarter.

Shares of Microsoftwere down nearly 8% in after-hours trading on Tuesday, before paring half those losses.

The culprit was softer growth in its Azure cloud-computing business, which was up 29% this quarter, while Wall Street expected a 30.1% increase.

Revenue of the intelligence cloud unit, which includes the Azure platform and has grown to become the company’s sales engine, rose to $28.5 million, also slightly below analysts’ expectations of $28.69 million, according to FactSet.

Still, Microsoft’s revenue rose 15 percent compared to a year ago, beating expectations.

The world’s largest publicly traded company is widely seen as a frontrunner in tech’s AI race. Microsoft invested aggressively in the technology, including a $13 billion bet on ChatGPT maker OpenAI early last year. Azure was a key focus point to that strategy: Microsoft said that AI lifted Azure’s revenue by eight percentage points.

But the initial frenzy over the potential of AI is subsiding somewhat, with bean counters on Wall Street questioning how much these investments will pay off. That was the case with Alphabet last week, which did not give a clear answer on how much money it’s making from its AI investments.

Commentary around AI spending was in focus during Microsoft’s earnings call. Management said that they expect to materially increase capital expenditure on AI in the next financial year, telling analysts that roughly half of the spending in the last financial year was on infrastructure that would drive long-term growth. Capex jumped 78 percent in the most recent quarter to $19 billion.

“It’s really on land and builds and finance leases and those things will be monetized over 15 years and beyond, and they are incredibly flexible.” said Amy Hood, Microsoft’s chief financial officer, “We have got long life, flexible assets.”

One company was able to cheer Microsoft’s results: Nvidia. That capex spending is a boon for the designer of the chips that power the AI boom. Nvidia’s stock fell 7% on Tuesday, but managed to recover more than half of those losses in the after-hours session.

Tom Jones2h

Prediction markets have, predictably, been given a boost by the summer of sports

Major platforms like Kalshi and Polymarket have seen huge upticks in users of late, thanks in no small part to what’s felt like a recent sporting smorgasbord, with major competitions across hockey, basketball, and soccer soaking up fans’ time (and spending, clearly) at the outset of summer.

While gaming industry groups may not like it, there’s been a huge change in the methods people are using to put money on the big games, with everyone from fortunate NYC bar owners, to a far less fortunate Spanish supporter, turning to prediction markets to try and turn their sports know-how into cold, hard cash.

According to a new report from Adam Blacker for apptopia, that shift might have been even more seismic than imagined in the wake of the NBA and NHL finals and around the 2026 World Cup kicking off.

2026 World Cup Reverses Seasonal Lull for Sports Betting Apps

According to a new report from Adam Blacker for apptopia, that shift might have been even more seismic than imagined in the wake of the NBA and NHL finals and around the 2026 World Cup kicking off.

South by Southwest Conference and Festivals

Gold Tesla Cybercabs are piling up, but they’re not picking up passengers yet

Low-volume production started in April. Now people are noticing them more and more in the wild.

Rani Molla6/15/26

Millie Giles

TAKING ACCOUNTS

6/15/26

Britain announces social media ban for under-16s starting early 2027

The UK government plans to use the same model for the restrictions as Australia — but how successful has that case study been so far?

UK Prime Minister Announces Under-16s Social Media Ban

Jon Keegan6/15/26

Anthropic pulls Fable and Mythos access worldwide after Trump administration bars their use by foreign nationals

Only days after releasing two versions of its next-gen AI model, Anthropic has disabled them for users worldwide.

Anthropic says it received a Friday night order from the Trump administration to suspend access to the models for any foreign national (anywhere in the world) — a group that included some Anthropic employees. In response, the company turned off access to everyone.

Last week, the company released to the public its much-anticipated Claude Fable 5 model (and its restricted version Claude Mythos 5, which is still being tested with trusted partners). Anthropic said in a blog post announcing the action that officials cited national security concerns with the new models, while offering few specific details.

The post said that the government gave the company “verbal evidence of a potential narrow, non-universal jailbreak” of the public Fable 5 model. A jailbreak is a means by which users can evade restrictions built into the code to unlock prohibited functionality. Anthropic downplayed the significance of the attack, and said other major models, such as OpenAI’s GPT-5.5, could also be affected by the technique described.

Fears of these first Mythos-class models being misused are running high, after Anthropic warned the cybersecurity world in May that the advanced cyber capabilities of Mythos have rapidly discovered thousands of vulnerabilities in ubiquitous software, leading to the decision to restrict the full version of the model to a close group of trusted partners for testing.

This morning, Axios reported that Anthropic technical staff have flown to Washington to meet with White House officials to resolve the issue.

The Wall Street Journal is reporting that the Trump administration’s decision to take action against Anthropic was prompted by discussions that Amazon CEO Andy Jassy had with officials, including Treasury Secretary Scott Bessent. According to the report, Amazon researchers said they had been able to evade some of Fable 5’s security restrictions using specific prompts. Amazon is a major investor in Anthropic.

Anthropic is currently suing the US government to fight the Pentagon’s blacklisting of the company on national security grounds.

Statement on the US government directive to suspend access to Fable 5 and Mythos 5

This morning, Axios reported that Anthropic technical staff have flown to Washington to meet with White House officials to resolve the issue.

Anthropic is currently suing the US government to fight the Pentagon’s blacklisting of the company on national security grounds.

Rani Molla6/15/26

Tesla used skewed data in push for European FSD approval, Reuters finds

Tesla has used highly questionable safety stats in an effort to win over European regulators and rekindle sales in the region, according to a Reuters investigation.

Tesla reportedly pitched regulators in Sweden and the Netherlands with claims that its Full Self-Driving (FSD) tech is over 7x safer than human drivers. However, independent researchers told Reuters that the stats are misleading because Tesla compares airbag-deployment crashes involving FSD-equipped vehicles with much broader US crash statistics, while also benchmarking newer Teslas against the entire US vehicle fleet, which is significantly older on average.

Despite the flawed metrics, the Dutch regulator approved FSD in April, saying its decision was based on its own “tests, analyses and verifications,” and Tesla is now pushing for EU-wide clearance. A version of FSD is currently available in five European markets.