Microsoft (MSFT) shares moved lower in late-Wednesday trading as the tech giant reported fiscal second-quarter Intelligent Cloud revenue that missed analysts’ expectations.
The company saw revenue rise 12% year-over-year to $69.63 billion, surpassing the analyst consensus from Visible Alpha. Earnings came in at $24.11 billion, or $3.23 per share, compared to $21.87 billion, or $2.93 per share, a year earlier. That was also above expectations for the quarter ended Dec. 31.
However, revenue from Microsoft’s Intelligent Cloud segment, which includes its Azure cloud computing platform, slightly missed projections while rising 19% to $25.54 billion. Total Azure revenue for the quarter approached $41 billion, the company said.
Shares of Microsoft fell more than 5% in extended trading. The stock, which also fell during the regular session, had gained about 5% so far in 2025 through Wednesday’s close.
Microsoft expects Intelligent Cloud fiscal second-quarter revenue of $25.9 billion to $26.2 billion, CFO Amy Hood said on the company’s earnings call. That would be higher than the analyst consensus of $25.76 billion from before the results were announced.
CEO Satya Nadella said in a statement that Microsoft’s AI revenue run rate rose to $13 billion. Nadella added on the company’s earnings call the number of daily users of Microsoft’s Copilot AI assistant doubled quarter-over-quarter.
The results come with Microsoft-backed OpenAI in focus this week after the surging popularity of an app from Chinese startup DeepSeek, which runs on an AI model it claimed can perform on par with American rivals at a fraction of the cost, raised concerns about the competitiveness of U.S. firms and their spending.
Raymond James and Bank of America analysts said that DeepSeek’s advances could push Microsoft, along with Alphabet’s (GOOGL) Google and Amazon (AMZN), to act with greater urgency. DeepSeek’s R1 model is now available on the Azure AI Foundry platform, Microsoft announced today, and customers will soon be able to run it locally on Copilot+ PCs.
This article has been updated to add more information about the company’s results and new share-price information. An earlier version of this story, which covers events that took place Wednesday, in one instance incorrectly referred to Thursday.