Microsoft stock slumps more than 6% on disappointing revenue outlook

Microsoft shares dropped more than 6% after issuing weak current-quarter guidance after the bell Wednesday.

The software giant topped Wall Street's fiscal second-quarter estimates, posting earnings of $3.23 per share on $69.63 billion in revenue. That surpassed the earnings per share of $3.11 and $68.78 billion in revenue forecast by analysts polled by LSEG. Shares were on pace for their worst day in more than two years.

The decline came as Microsoft finance chief Amy Hood said the company expects revenues for the current quarter to range between $67.7 billion and $68.7 billion, falling short of the $69.78 billion, per LSEG. Revenue grew 12.3% year over year, the slowest growth since the middle of 2023.

Microsoft also posted a slowdown in growth in its Azure and other cloud services revenues. The segment was up 31%, down from 33% in the prior quarter.

Many Wall Street analysts stood by the technology behemoth despite the disappointing guide and Azure slowdown. Goldman Sachs analyst Kash Rangan called the company "well-positioned" to continue benefiting from artificial intelligence adoption and among the "most compelling investment opportunities" in the industry.

"Microsoft has proven they can drive a Cloud business, and now they have shown they can drive the largest AI business via a combination of high-quality Gen AI inferencing and Gen AI apps," wrote Bernstein's Mark Moerdler, adding that management needs to pivot toward the core Azure business independent of AI.

Microsoft shares dipped 2% during Monday's session as part of a broader tech sector sell-off. The drop came as Wall Street assessed the fallout from DeepSeek's AI models. Estimates suggest the China startup trained its open-source model at a fraction of the costs