What happened
Although Microsoft (MSFT 0.54%) posted estimate-beating quarterly results the previous day, its stock wasn't doing well on Wednesday. On concerns about a key part of the business, Microsoft's share price was down by more than 4% in midafternoon trading. That compared unfavorably to the S&P 500 index's slight 0.2% decline.
So what
Microsoft unveiled its fourth-quarter 2023 figures after market hours on Tuesday. For the period, revenue was $56.2 billion, an 8% improvement on a year-over-year basis. Net income according to generally accepted accounting principles (GAAP) also rose, climbing almost 20% to land at just over $20 billion ($2.69 per share).
Both headline numbers comfortably beat the consensus analyst estimates for $55.4 billion in revenue and $2.55 per share.
While the top- and bottom-line beats were comforting, there were certain areas of concern in Microsoft's results.
Arguably the most important one was its crucial intelligent-cloud division, which operates the Azure cloud service. This has been the motor of growth for the company, and although its revenue rose by 26% during the quarter, that figure was 1 percentage point higher in the third quarter. Zooming out slightly, those growth rates have consistently declined for several quarters in a row.
Now what
Investors don't like when a top-growing division shows any sign of slowing down, so their reaction to Microsoft's news was understandable.
It does seem a bit overblown, though. After all, the company remains not only a powerhouse in cloud computing, but it also has its fingers deep in other tech pies and is a leader in commercial artificial intelligence thanks to its investment in ChatGPT developer OpenAI.
