Shares of Microsoft (MSFT), a 1.81 trillion dollar company, had a volatile trading session on January 24. Thanks largely to its cloud computing business, Microsoft’s share price originally rose by more than 4% in after-hours trading. However, it later gave up these gains when Amy Hood, Microsoft’s chief financial officer, revealed that new business stalled in December. The company anticipates growth to decelerate in the current quarter, as commercial clients continue to be wary about investing in new products. MSFT closed Tuesday’s session at $242.04, 0.22% lower than the previous day’s close.
MSFT is trading 2.18% lower in the pre-market session after being down by 18.43% year-on-year. In 2022, the stock dropped 29%, while the S&P 500 Index had dropped 20%.
Despite a decline in demand for personal computers and business software, Microsoft Corp.’s second-quarter profit exceeded analysts’ expectations led by growth in its Azure cloud services division. In the quarter that concluded on December 31, adjusted earnings were $2.32 per share, while total revenues increased 2% to $52.7 billion, the smallest quarterly increase in more than six years. Sales increased 38% in Microsoft’s closely monitored Azure cloud computing division.
The software giant disclosed a $10 billion investment in OpenAI. In an effort to compete with rivals like Alphabet Inc., Amazon.com Inc., and Meta Platforms Inc. for market share in the expanding AI sector, Microsoft aims to incorporate GPT, the language model that powers ChatGPT, into its Teams and Office software.
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Chief Executive Officer Satya Nadella noted that the sector is experiencing a moment of deceleration and will need to adapt after years of double-digit revenue growth driven by Microsoft’s expanding cloud business and strong growth during the Covid-19 pandemic’s technological investment binge. The company’s sales growth in the second fiscal quarter was the slowest in the previous six years.
Earlier, Microsoft had announced that it would cut 10,000 positions, or around 5%, from its staff. Jobs have been lost in the tech sector recently as spending on advertising and other things has decreased.
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Along with the decline in computer shipments, revenue from PC-focused goods such as Microsoft’s Windows operating system and Office productivity software also fell. Microsoft reported a 12% decline in sales from the Xbox video gaming system and a 39% decline in spending on its Windows software. According to Gartner Inc., worldwide PC unit sales fell 29% in the December quarter compared to a year earlier, marking the greatest decline since the market research company started keeping track in the middle of the 1990s.