Microsoft stock dropped!
The tech giant’s stock price dropped by 6.2% after it gave a weaker-than-expected financial forecast for the current quarter. This happened after the stock market closed on January 29th.
Even though Microsoft made more money than experts predicted for the second quarter, its stock still fell. The company earned $3.23 per share and a total revenue of $69.63 billion. Analysts that were surveyed by LSEG had expected earnings of $3.11 per share and revenue of $68.78 billion.
However, despite exceeding expectations, the stock had its worst performance in a single day since October 2022. The decline happened as Microsoft’s Chief Financial Officer, Amy Hood, mentioned the company’s expectations.
She said the company expects to make between $67.7 billion and $68.7 billion in revenue this quarter. This was lower than the $69.78 billion that experts had predicted. Even though Microsoft’s revenue grew by 12.3% compared to the same time last year, it was the slowest growth the company had seen since mid-2023.
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Microsoft’s cloud business, including Azure, is still growing but at a slower rate than before. The revenue from these services has been reduced. This quarter, it grew by 31%, compared to 33% in the previous quarter. Even though this was not exactly great news, many experts on Wall Street still believe in Microsoft’s future.
Kash Rangan, a Goldman Sachs analyst, said Microsoft is in a good position to keep making money from artificial intelligence (AI). He also believes it is one of the best companies to invest in. Another expert, Mark Moerdler from Bernstein, said Microsoft has done a great job building its cloud business. He said the company is now leading in AI. However, he thinks the company should focus more on growing Azure’s cloud services separately from AI.
Microsoft’s stock went down by 2% on January 27th. It dipped because many tech companies, including Microsoft, saw their stock prices drop. This happened as Wall Street started looking closely at the fallout from DeepSeek AI models. DeepSeek, a startup in China, can create AI models at a much lower cost compared to the more expensive models from American companies. One of these companies is Microsoft.
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During a meeting, the CEO of Microsoft, Satya Nadella, mentioned that DeepSeek’s R1 model is available on GitHub and Microsoft’s Azure AI Foundry. He also said that it will eventually be available on Copilot+ PCs.
On the 30th of the month, other tech companies had better results. For example, Meta Platforms saw its stock increase by nearly 4% because of strong earnings. Tesla’s stock also went up, even though its car sales declined, and it did not meet expectations. IBM had a big jump of 14% because of good earnings and increased demand for AI products. But things are a bit different for Microsoft. Since the beginning of 2025, Microsoft’s stock has dropped by 1.5%.