The company just isn’t growing robustly enough for some investors.
The eyes of a great many investors were on Microsoft (MSFT -1.08%) after the market closed on Tuesday. That’s when the tech giant published its latest set of quarterly results. While these certainly weren’t bad, certain fundamentals were concerning enough to inspire a bit of a sell-off in the company’s stock the following day. Microsoft’s share price slipped by a bit over 1% on Wednesday, while the S&P 500 index notched a 1.6% gain.
Only a marginal set of beats
Microsoft divulged that it earned $64.7 billion in its fourth quarter of fiscal 2024, for a 15% year-over-year increase. Net income, according to generally accepted accounting principles (GAAP) standards, was just over $22 billion, or $2.95 per share, representing a nearly 10% improvement over the year-ago profit.
Growth in headline figures is always welcomed by investors. However, Microsoft only marginally beat the average analyst estimates. Collectively, prognosticators tracking the stock were modeling just under $64.4 billion for revenue and $2.94 in per-share net income.
Of its three business segments, Microsoft’s Intelligent Cloud unit was the largest in terms of revenue for the quarter. It also boasted the most growth, rising 19% year over year to bring in more than $28.5 billion. Productivity and Business Processes rose by 11% to $20.3 billion. Finally, More Personal Computing increased by 14% to almost $15.9 billion.
Maybe it’s not such a pretty color
One sore spot among those figures was Microsoft’s take for its Azure cloud service — a key driver of revenue growth lately for the company. Azure’s year-over-year growth was 29%. However, the consensus analyst estimate was for slightly over 30%. Another worry is that Azure is slowing — its growth figure in the third quarter was 31%.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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