Microsoft reports slowing cloud business growth in the first quarter of 2025
By ForGeeks Microsoft announced slow growth for its cloud business in the first quarter of 2025 due to challenges in building the data centers needed to meet the demand for artificial intelligence (AI). The company’s shares fell 4.5% after the close of trading due to high costs, low AI revenue and stiff competition from Chinese models such as DeepSeek.
Although AI services in Azure grew 157%, the growth was not reflected in sales due to insufficient data center capacity. Microsoft plans to consolidate efforts to improve their performance by the end of the fiscal year.
Microsoft plans to consolidate efforts to improve their performance by the end of the fiscal year.
Azure has $300 billion in commercial service contracts, but that revenue has not yet been recognized. CFO Amy Hood said demand remains strong, with commercial orders up 67%. Microsoft will continue to invest heavily in cloud technology, and plans to spend $80 billion on AI-powered data processing.
Microsoft will continue to invest heavily in cloud technology, and plans to spend $80 billion on AI-powered data processing.
