Microsoft on Thursday reported its slowest growth in six years and cautioned it a broader slump will continue as both consumers and chains put the brakes on spending.

The technology massive said revenue increased 2 percent from a year earlier  so as to $52. 7 billion to make the three months that ended in 12. Profit fell 12 percent to $16. 4 billion.  

Both were below Wall Way expectations, according to FactSet. Microsoft’s share price initially raised significantly more than 4 percent in after hours trading, thanks largely in order to really its cloud-computing business, but it lost those gains after Amy Hood, Microsoft’s chief financial officer, said in a call combined with investors that new business slowed in December. The company conjointly said that it expects growth to continue to slow inside the current quarter, which ends March 31, as business purchasers always will be cautious about buying new products.

Investors include been closely watching Microsoft’s cloud computing business and Azure, the actual flagship cloud product, because of the importance to the company’s future. Using October, the company told investors should be expected Azure’s growth to step by step five percentage points in the quarter. But Azure sales increase slowed slightly less, to 31 percent, delete word better than industry analysts feared, and the overall segment it calls Intelligent Cloud have been up 18 percent, roughly in line with expectations.

“We saw strong carrying out in lots of regions around the world, however, performance in the You. S. was weaker than expected, ” Ms. Hood said.

Wall Street has been trying to separate credit issues from how Microsoft is performing, said Brett Iversen, which in turn heads investor relations for the company. “We are focused along what we can control, which is the execution side, ” he said.

The past several months previously violent for Microsoft. In December, its $69 billion deal to collect it game maker Activision would be challenged by regulators in the United States, because last week it began laying off about 10, 000 staff.

On Monday, Microsoft announced a major new money spent in OpenAI, the start-up behind ChatGPT and other generative man-made intelligence breakthroughs, and signaled plans to include A. I. by an array of Microsoft products.

Satya Nadella, Microsoft’s chief executive, emphasized the urgency with which the company could be pursuing A. I. “We fundamentally believe that the next ideal wave is going to be A. I., ” he identified on a call with Wall Street analysts, while adding that many Microsoft is moving aggressively to “catch the wave. ”

He said the company is trying to form long-term loyalty from customers by helping them operate more quickly. Because much of cloud computing is often billed based on the subject of how much computing power a customer uses, helping customers sometimes be more efficient can reduce Microsoft’s sales in the short search phrase. But Mr. Nadella has argued that it also helps examine the value of cloud computing to let customers “do additionally with less. ”

The biggest slowdown came received from Microsoft’s personal computing business, where sales fell 19 percent as well as the operating income fell 47 percent. The business boomed during one of the first part of the pandemic. But shipments of new Servers globally have been in a near free fall for months , as well as , sales of the Windows operating system installed on new computer units declined 39 percent. The company told investors it expected ineffective PC demand to persist and that it would look very much like it did before the pandemic.

While saying the layoffs last week, Microsoft said revamping costs would hurt $1. 2 billion, including severance, ending real estate leases as making “changes to our hardware portfolio, ” which primarily comprised of its line of Surface tablets and laptops. Sales of device were down 39 percent last quarter, some of which this can blamed on unspecified “execution challenges” in launching new products inside of its Surface lineup.

The company’s advertising revenue, understanding that includes its Bing search engine and LinkedIn, performed slightly even more serious than it expected, Mr. Iversen said.

The returns also showed continued costs from foreign currency fluctuations, having the highly effective dollar cutting sales growth by five percentage points.