By Chloe Aiello
Microsoft shares dropped in extended trading on Wednesday despite reporting better-than-expected quarterly earnings due to investor concerns about its crucial cloud business.
Microsoft ($MSFT) said its revenue grew 12 percent since last year, boosted by a 48-percent jump in commercial cloud revenue, which Chief Financial Officer Amy Hood said in a statement grew to $9 billion year-over-year.
“Our strong commercial cloud results reflect our deep and growing partnerships with leading companies in every industry including retail, financial services, and healthcare,” Satya Nadella, CEO of Microsoft, said in a statement.
Microsoft did not break out revenue for the company's Azure cloud business, but did disclose it grew 76 percent ー which actually represents a slowdown from quarters in the past couple years, when growth was even higher.
Investors are on the lookout for signs of slowing growth from cloud companies, amid worsening global economic conditions. Within the past week, chipmakers and equipment sellers Nvidia ($NVDA), Intel ($INTC), and Juniper Networks ($JNPR) all cited slowing business from cloud customers for disappointing revenue outlook, Bloomberg reported.
The world’s most valuable company reported earnings per share of $1.10 on revenue of $32.5 billion, just beating on earnings and falling in line with revenue expectations of analysts surveyed by Thomson Reuters, who were anticipating earnings of $1.09 per share on $32.51 billion in revenue.
Microsoft was riding high into second quarter earnings, after eclipsing Apple as the world’s most valuable company last quarter, but growth in the cloud business will be imperative for investors, especially as the competition heats up with rivals like Amazon ($AMZN) Web Services and Alphabet's ($GOOGL) Google Cloud.