Microsoft Stock Dips 5% in 2025 After Q2 Intelligent Cloud Revenue Misses Forecast
Microsoft's fiscal Q2 2025 results reveal a slight shortfall in Intelligent Cloud revenue, causing shares to decline despite overall revenue growth and strong AI advancements.
Microsoft (MSFT) shares declined over 5% in after-hours trading on Wednesday following the release of its fiscal second-quarter 2025 earnings report, where Intelligent Cloud revenue fell just short of analyst expectations.
The tech giant posted total revenue of $69.63 billion for the quarter, marking a 12% increase year-over-year and surpassing analyst forecasts. Earnings reached $24.11 billion, or $3.23 per share, up from $21.87 billion, or $2.93 per share, a year earlier—both figures exceeding market predictions for the period ending December 31.
However, revenue from Microsoft’s Intelligent Cloud segment, which includes its flagship Azure cloud platform, rose 19% to $25.54 billion, slightly below anticipated targets. The company reported that total Azure revenue for the quarter neared $41 billion.
Despite the shortfall, Microsoft’s CFO Amy Hood projected Intelligent Cloud revenue between $25.9 billion and $26.2 billion for the upcoming fiscal quarter, exceeding the prior analyst consensus of $25.76 billion.
CEO Satya Nadella highlighted the company’s AI progress, revealing that Microsoft’s AI revenue run rate has climbed to $13 billion. Additionally, the daily users of Microsoft’s Copilot AI assistant doubled quarter-over-quarter, signaling strong adoption of AI-powered tools.
This earnings announcement comes amid growing attention on AI competition, notably from Chinese startup DeepSeek. DeepSeek’s AI model, which rivals American technology at a lower cost, has sparked discussions about the competitive landscape and spending strategies of U.S. tech firms.
Analysts from Raymond James and Bank of America noted that DeepSeek’s advancements could motivate Microsoft, Google (Alphabet), and Amazon to accelerate their AI initiatives. Microsoft recently announced that DeepSeek’s R1 model is now accessible via the Azure AI Foundry platform, with plans for local deployment on Copilot+ PCs soon.
Note: This article has been updated to include additional details on Microsoft’s earnings and share price movements. Earlier versions contained a date reference error.
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