Microsoft Shares Down 16.8% YTD Despite Q4 Beat and 39% Azure Growth
Microsoft shares plunged 16.8% YTD despite reporting Q4 adjusted EPS of $4.14 versus a $3.85 estimate and revenue of $81.27 billion beating the $80.28 billion consensus, with Azure growing 39% year over year. AI server demand lifted Foxconn’s revenue 21.6% to NT$1.33 trillion, underscoring infrastructure spending trends.
1. Q4 Earnings Beat and Share Decline
In its fiscal fourth quarter, Microsoft delivered adjusted EPS of $4.14, surpassing the $3.85 consensus, with revenue of $81.27 billion beating the $80.28 billion forecast and Azure cloud revenue up 39% year over year. Despite the beat, shares have sunk 16.8% YTD as investors weigh heavy capital expenditures and cloud margin sustainability.
2. AI Infrastructure Demand Trends
Hardware partners like Foxconn reported a 21.6% revenue increase to NT$1.33 trillion in Jan-Feb, driven by AI server demand for accelerators used by Microsoft and peers. Microsoft's commitment to data center and AI capacity spending, part of a collective $650 billion investment, underscores robust infrastructure tailwinds but raises cost concerns.