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Microsoft Slides 22% in Six Months as Heavy AI Outlays Meet Stabilizing Azure Growth

A valuation reset reflects investors prioritizing returns on a $37.5 billion capex surge.

Overview

  • Revenue rose 17% to $81.3 billion in fiscal Q2 ended Dec. 31, driven by cloud demand.
  • Azure grew 39% in the quarter, with management guiding 37% to 38% growth for Q3 in constant currency.
  • Adjusted earnings per share increased 24% to $4.14, underscoring strong profitability.
  • Capital expenditures jumped about 66% year over year to $37.5 billion to fund AI and cloud infrastructure.
  • Shares trade near 24.7 times forward earnings, with Goldman Sachs reiterating a Buy rating and a $600 price target.