Microsoft Earnings Release FY22 Q4: Cloud computing business falls short of market expectations for the first time

Microsoft announced its Q4 financial report for fiscal 2022 last night. The financial report showed that the net profit for the quarter was $18.765 billion, which was higher than market expectations of $17.534 billion. Although most of Microsoft’s businesses are still growing, some core businesses such as cloud computing have not met analysts’ expectations, causing market concerns.
ID@Azure project

The cloud computing business is one of Microsoft’s fastest-growing and most promising businesses. In the past few years, Microsoft’s stock price has repeatedly hit new highs by virtue of its cloud computing business. In fact, the cloud computing business in the quarter was not bad, but the growth rate was slightly lower than 50%, which made the market worry that Microsoft’s cloud computing business has begun to peak.

The core of Microsoft’s intelligent cloud business is the Microsoft Azure platform. In the quarter, the year-on-year growth of cloud computing reached 46%, which was lower than analysts’ expectations of 50%. The growth rate of the cloud computing business in Q3 also reached 50%. This is the first time in the last five quarters that the growth rate of cloud computing has been lower than 50%, which did not meet analysts’ expectations. In the past few years, Microsoft’s cloud computing business has maintained a very high growth rate. For example, in the fiscal year 2019, the quarterly growth rate of Azure was as high as 76%, 73%, and 64%.

Relying on the strong growth rate, the market has great expectations for Microsoft’s cloud computing business, which is one of the important factors for Microsoft’s stock price soaring. After that, the growth rate began to decline and then fell below 50% for the first time.