Microsoft Shares Fall on Azure Forecast Concerns

Microsoft's shares fell following a lower-than-expected revenue forecast for its Azure cloud business, despite reporting stronger-than-expected quarterly earnings with a 16% revenue increase. The company's struggle to meet surging AI demand due to data center capacity constraints has led to a projected slower growth in Azure, impacting investor sentiment. However, Microsoft's AI business is on track to reach a $10 billion annual revenue run rate, marking rapid growth in its product portfolio. In response to increasing AI investment needs, Microsoft and other tech giants like Meta are boosting their capital expenditures, though this raises concerns about the impact on profit margins. Analysts remain optimistic about Microsoft's long-term AI prospects, maintaining positive ratings despite short-term challenges. The broader tech sector also saw declines, reflecting investor caution over the substantial costs associated with AI infrastructure development.