Microsoft’s shares dropped 6.3% after the company reported fourth-quarter results that showed investor sentiment has soured due to concerns over capital expenditures and the impact of GenAI on the top line. However, the tech giant narrowly beat analyst revenue expectations in Personal Computing and Business Services.
Commercial bookings growth accelerated by 75% year-over-year, boosted by OpenAI Azure commitments and deals across Azure and M365. In contrast, Intelligent Cloud’s constant-currency revenue growth came in at 31%, missing investor expectations of 32-33%. The company also guided to a similar growth rate next quarter, which disappointed some market participants.
Despite the disappointing results, Microsoft CEO Satya Nadella praised DeepSeek’s efforts in developing an open-source AI model, calling it “super impressive.” Nadella’s comments suggest that upstarts like DeepSeek could disrupt the competitive landscape of AI by using resourceful and efficient approaches rather than relying on high budgets and advanced hardware.
The market’s reaction to Microsoft’s results indicates that investors consider this news significant but not fundamental in changing their perception of the business. The stock has been volatile, with 13 moves greater than 2.5% over the last year. While it may be a good opportunity to buy Microsoft shares, it’s essential to assess the company’s long-term prospects and growth potential.
Investors who bought $1,000 worth of Microsoft’s shares five years ago would now have an investment worth $2,407, demonstrating significant growth. As generative AI continues to impact business operations, investors may prefer lesser-known semiconductor stocks that are benefiting from this trend.
Source: https://finance.yahoo.com/news/why-microsoft-msft-shares-trading-182159231.html