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What’s happening: Shares of Microsoft Corporation fell on Thursday, after the company released results for its fiscal first quarter.
What happened: The tech giant reported better-than-expected sales and earnings for the latest quarter.
However, Microsoft guided to slower growth in its cloud business Azure in the current quarter.
How were the results: The Redmond, Washington-based company reported low double-digit growth in sales in the quarter ended September 30.
Why it matters: Microsoft has been making huge investments for building its AI infrastructure, while also looking to expand its footprint in the datacentre market. The company’s capital expenditures increased 5.3% to $20 billion during the latest quarter, from $19 billion in the previous quarter.
Revenue from the Productivity and Business Processes segment gained 12% year-over-year to $28.3 billion, while Intelligent Cloud segment revenues surged 20% to $24.1 billion. More Personal Computing revenues gained 17% year-over-year to $13.2 billion.
Sales in the Azure cloud computing business surged 34% year-over-year in constant currency terms during the latest quarter.
“AI-driven transformation is changing work, work artifacts, and workflow across every role, function, and business process. We are expanding our opportunity and winning new customers as we help them apply our AI platforms and tools to drive new growth and operating leverage,” CEO Satya Nadella said.
The company said its AI business is on course to exceeding $10 billion in annual revenues next quarter, which would make this the fastest growing business in Microsoft’s history.
Microsoft guided to sales of $68.6 billion for the fiscal second quarter, below market estimates of $69.9 billion. The company also projected slower sales growth of 31%-32% in its Azure business.
How shares responded: Microsoft’s shares declined 6.1% to close at $406.35 on Thursday, following the release of quarterly results. The stock has climbed around 10% year to date.
What to watch: Investors will continue monitoring the company’s investments in the AI, which are expected to significantly impact its overall results ahead.
Context: The EUR/USD forex pair edged higher this morning, as investors assessed inflation in the Eurozone.
Details: Data released on Wednesday showed higher-than-expected inflation in the Eurozone, which raised speculations of the European Central Bank continuing with its gradual approach to interest rate cuts and avoiding big reductions.
The annual inflation rate in the Eurozone accelerated to 2% in October, from 1.7% in the previous month. The figure also came in higher than market expectations of 1.9%.
Meanwhile, the unemployment rate in the Eurozone held steady at 6.3% in September.
A higher-than-expected reading on economic growth also supported the euro. Eurozone’s economy grew by 0.4% in the third quarter, topping market estimates of 0.2%.
Germany’s economy expanded by 0.2%, while France and Spain also posted better-than-expected growth.
Weakness in the US dollar lent further support to the EUR/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, slipped to 103.98 this morning.
The EUR/USD forex pair rose more than 0.2% to 1.0885 on Thursday, while the EUR/GBP pair gained over 0.7% to 0.8439 this morning.
What to watch: With no major economic reports scheduled from the Eurozone today, investors will watch the release of jobs data from the US. The US economy is projected to add 113,000 jobs in October, representing the slowest pace in six months, compared to a 254,000 gain in September.
Analysts expect the unemployment rate in the US to remain at 4.1% in September. Average hourly earnings for all employees on private nonfarm payrolls, which rose by 0.4% to $35.36 in September, is expected to increase by 0.3% in October.
Other Markets: US trading indices closed lower on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.90%, 1.86% and 2.44%, respectively.
The US announced imposing sanctions on around 400 entities and individuals from several countries, for “enabling” Russia in its war with Ukraine. The news sent the RUB/USD pair lower in forex trading this morning.
Australia’s CoreLogic Home Value Index rose by 0.3% in October, easing from the 0.4% increase recorded in September, which exerted pressure on the AUD/USD forex pair.
Taiwan’s S&P Global manufacturing PMI declined to 50.2 in October, from 50.8 in the previous month, which sent the TWD/USD pair lower in forex trading this morning.
South Korea’s S&P Global manufacturing PMI came in unchanged at 48.3 in October. The latest reading signalling a contraction for the second straight month exerted pressure on the KRW/USD forex pair.
Japan’s au Jibun Bank manufacturing PMI was revised upward to 49.2 in October, compared to a preliminary reading of 49.0. However, the latest reading came in lower than the previous month’s 49.7, which sent JPY/USD lower in forex trading this morning.
Russia’s manufacturing PMI and money supply M2, Türkiye manufacturing PMI, UK’s nationwide house prices and manufacturing PMI, South Africa’s manufacturing PMI and total vehicle sales, Mexico’s foreign exchange reserves, unemployment rate and manufacturing business confidence, India’s bank loan growth, deposit growth and foreign exchange reserves, Brazil’s industrial production and manufacturing PMI, Canada’s manufacturing PMI, US S&P Global manufacturing PMI, construction spending, ISM manufacturing PMI, Baker Hughes crude oil rigs and Baker Hughes total rigs, Mexico’s manufacturing PMI and government budget value, Australia’s CoreLogic home value index, Spain’s new car sales, as well as Italy’s new passenger car registrations.
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