Microsoft (MSFT.US) shares fell more than 4% on Thursday, closing at $405.97. The company reported strong overall revenue and profit growth for the third quarter of fiscal year 2026, exceeding Wall Street expectations. However, a slowdown in capital expenditures weighed on investor sentiment. Microsoft's total revenue reached approximately $82.886 billion, an 18% year-over-year increase, significantly above consensus estimates. Operating profit was about $38.398 billion, up 20% from the prior year, while net income rose 23% to $31.778 billion. Diluted earnings per share came in at $4.27, also a 23% increase. Despite these results, capital expenditure growth slowed markedly, rising 49% compared to the same period last year, down from 66% growth in the previous quarter. Analysts had anticipated approximately 65% growth. The slower pace suggests that Microsoft is not investing in capital projects as quickly as the market expected. Additionally, revenue from Microsoft Azure cloud services grew 40% year-over-year, only slightly exceeding expectations. In contrast, Alphabet's Google Cloud reported a 63% revenue increase for the same period, far surpassing market forecasts and highlighting heightened competitive pressure on Microsoft's cloud business growth momentum.
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