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Microsoft Shares Drop Despite Earnings Beat Amid Heavy AI Infrastructure Spending
Microsoft Shares Drop Despite Earnings Beat Amid Heavy AI Infrastructure Spending
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Microsoft's Q1 earnings outperformed expectations with $3.72 EPS and $77.7 billion revenue, yet shares fell over 5%. The divergence reflects investor concerns over ballooning capital expenditures—$34.9 billion, including massive GPU/CPU purchases for Azure—and a $3.1 billion OpenAI-related income hit.
Commercial cloud revenue grew 26% YoY to $49.1 billion, while Azure surged 40%. The OpenAI partnership now represents a $13 billion commitment, with Microsoft securing 27% equity at a $135 billion valuation. A new $250 billion Azure contract partially offsets lost first refusal rights for compute services.
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