Microsoft's Q4 Results Mixed, Cloud Business Slows, AI Yet to Impact Earnings

$Microsoft (MSFT.US)$ Q4 FY23 (ending in June):
• Revenue +8% Y/Y to $56.2B ($0.7B beat).
• Gross margin 70% (+2pp Y/Y)
• Operating margin 43% (+4pp Y/Y).
• EPS $2.69 ($0.14 beat).
Azure +26% Y/Y (+27% fx neutral).

Q4 Overall Performance Beats Expectations, Cloud Growth Slows

In Q4, Microsoft's productivity and business division saw a 10% YoY growth, exceeding estimates at $18.3 billion. Office 365 and cloud services contributed to a 12% YoY increase, while consumer products and cloud services grew 3%. The intelligent cloud business revenue rose by 15% to $23.99 billion, primarily driven by Azure's 26% growth.

AI Technology Still Evolving

Despite integrating AI in many products, the impact on earnings remains gradual. Microsoft is focused on leading the AI platform shift, but growth will be progressive. Azure OpenAI users surged to 11,000 by June-end. Monetization efforts for AI tools, like Microsoft 365 Copilot, are ongoing.

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