Microsoft CEO Satya Nadella recently spoke at a company event in Jakarta, Indonesia, focusing on artificial intelligence technologies. Despite Microsoft's better-than-expected earnings report, the stock experienced its steepest sell-off in two years due to concerns about the company's forecast for the current period.
For the period ending in December, Microsoft predicted revenue in the range of $68.1 billion to $69.1 billion, which implied 10.6% growth. Revenue in Microsoft's cloud infrastructure business, Azure, saw a 33% increase, with CFO Amy Hood predicting growth in the fiscal second quarter.
However, analysts remain optimistic about Microsoft's core Azure and Office growth businesses, recommending buying the stock despite a softer Q2 outlook. Fiscal first-quarter revenue increased by 16% from a year earlier, exceeding analyst estimates, with net income rising by 11%.
CEO Satya Nadella expressed confidence that supply-demand issues with outside suppliers will be resolved in the second half of the fiscal year. Microsoft continues to invest heavily in artificial intelligence, with a focus on building out infrastructure and increasing chip spending to handle heavier workloads.
Despite expectations of a $1.5 billion hit to income in the current period due to investments in AI startups, Microsoft remains committed to its AI initiatives. Spending on property and equipment has also increased significantly year over year.
As of midday Thursday, Microsoft shares were up over 9% for the year, while the Nasdaq had risen by 21%. The market response to Microsoft's earnings report reflects ongoing investor interest in the company's AI investments and growth prospects.