Microsoft stock drops over 6% after results fall short in latest AI disappointment

　　Microsoft (MSFT) announced its fiscal fourth quarter earnings after the bell on Tuesday, beating on the top and bottom lines, but missing on Cloud revenue expectations, sending shares of software giant tumbling following the report.

　　For the quarter, Microsoft reported earnings per share (EPS) of $2.95 on revenue of $64.7 billion. Wall Street was anticipating EPS of $2.94 on revenue of $64.5 billion, according to data compiled by Bloomberg. Microsoft reported EPS of $2.69 and revenue of $56.2 billion during the same period last year.

　　Microsoft's overall Cloud revenue came in at $36.8 billion, in line with expectations of $36.8 billion, but the company's Intelligent Cloud revenue, which includes its Azure services, fell short, coming in at $28.5 billion versus expectations of $28.7 billion.

　　Shares of Microsoft fell more than 7% in after-market trading.

　　Shares of fellow tech giants fell following Microsoft's announcement including Meta, which saw shares drop more than 3%.

　　report follows rival and Google parent Alphabets (GOOG, GOOGL) earnings announcement last week, during which the company said it is seeing an uptick in cloud revenue partially due to interest in AI products.

　　Still, Google didn‘t offer specific numbers on the impact of AI on the cloud business, leaving some analysts like UBS Global Research’s Stephen Ju to predict that revenue benefits from the companys AI spending might not come until the first half of 2025 at the earliest.

　　According to UBS Global Research analyst Karl Keirstead, Microsoft has also been grabbing more market share from Google and Amazon.

　　“In terms of share shifts among AWS, Microsoft Azure, and Google Cloud, the most consistent theme in this round of checks was the number of customers and partners that cited share gains by Microsoft resulting from its early lead on the AI front,” Keirstead wrote in a recent note about the three major cloud players.

　　“This has been a recurring theme from checks over the last 6-12 months and the commentary about Azures relative strength felt consistent with prior checks,” he added.

　　During Alphabets earnings call, CFO Ruth Porat said the company spent $13 billion on capital expenditures, up from $12 billion in the prior quarter, adding that the vast majority of that spending is going toward AI.

　　Amazon (AMZN) is set to report earnings on Aug. 1.

　　Shares of Google are up 22% year to date, while shares of Amazon are up 23%.