Microsoft posted quarterly results above forecasts, but the slight slowdown in growth in its cloud business disappointed investors, sending the stock down nearly 5% in after-hours trading on Wednesday. For Q2 ended December 31, the company reported revenue of $81.27bn (up 17% y-o-y) and EPS of $4.14, both above expectations. Net profit reached $38.46bn, compared with $24.11bn a year earlier.

The "Intelligent Cloud" division, a strategic engine for the group, generated $32.91bn (up 29%), but Azure growth eased to 39%, from 40% in the previous quarter. Although in line with expectations, the dip, in a competitive market, is raising doubts about the potential for future growth. At the same time, Microsoft posted a surge in commercial bookings (up 230%) and a record order backlog of $625bn, with nearly half coming from OpenAI.

Microsoft also benefited from an accounting gain of $9.97bn tied to OpenAI's restructuring, which turned its lucrative arm into a not-for-profit entity. The transaction, although dilutive, strengthened the outlook for long-term collaboration between both entities. To support the expansion of artificial intelligence, the group raised capital expenditures to $37.5bn (up 66%), above expectations, funding in particular new data centers and deals with CoreWeave and Nebius.

Results in other divisions were mixed. The "Productivity and Business Processes" segment rose 16% to $34.12bn, while "More Personal Computing" fell 3% to $14.25bn, weighed on by a decline in Xbox revenue (down 5%). In a tense stockmarket environment and amid questions over the impact of AI on its traditional software, Microsoft will need to convince analysts during its conference call scheduled overnight.