In its quarterly earnings report, Microsoft, the second-most valuable US business, sounded a cautious tone as a dramatic decline in consumer spending has caused a slew of high-profile layoffs across the tech sector. On a one-hour call on Tuesday, the company’s CEO, Satya Nadella, and other Microsoft executives used the terms caution and cautious at least six times.
Microsoft is the biggest global barometer for enterprise and cloud investment, according to Wedbush analyst Dan Ives. It’s not shocking that Nadella mentioned a slowdown in cloud computing. It is evident that a darker macro is approaching. However, Nadella declared that Microsoft would concentrate on AI technology, referring to it as the coming big computing wave.
Video Courtesy: CNBC-TV18
The internet giant has made a sizable investment in OpenAI, strengthening its relationship with the startup that created the ChatGPT chatbot sensation and expanding on investments it made in AI four years ago. The dramatic slowdown in Microsoft’s revenue growth, which was more pronounced in its PC division than in the cloud business, was described by analysts as a warning sign for the computer industry.
The quarter was basically fine, but we started to see a slowdown in December, and the outlook for the quarter was worse than predicted, said analyst Rishi Jaluria. What we learned is that no one is protected from the macro, he added. Microsoft’s so-called intelligent cloud division posted third-quarter sales slightly below analysts’ projections, which called for growth of 19%. However, it revealed second-quarter revenue for that division that was stronger than anticipated, which initially drove shares higher Tuesday evening.
Companies like Facebook parent Meta Platforms and Amazon.com Inc. are already planning for difficult months by eliminating tens of thousands of workers to maintain their cash reserves.
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