Microsoft’s Azure Slowdown Overshadows Optimism About AI Growth

• Cloud-computing demand eases after years of robust spending
• CFO Hood ‘encouraged’ by adoption of software maker’s AI tools

Microsoft Corp. posted tepid quarterly sales growth and forecast a continued slowdown in its Azure cloud-services business, overshadowing optimism about customer interest in new artificial intelligence-powered products. The shares dropped almost 4% in late trading.

While overall results in the period ended June 30 topped analysts’ projections, Azure revenue growth slipped to 27%, excluding currency impacts, from 31% in the previous quarter. The world’s largest software maker projected that Azure gains would slow further in the current quarter, and said it would boost spending to expand data centers for new cloud services — while expecting only a gradual increase in AI revenue.