Adobe (NASDAQ: ADBE), Snowflake (NYSE: snow) and Salesforce (NYSE: CRM) was among the biggest decliners in business software on Wednesday after Microsoft (NASDAQ:MSFT) predictions about its Azure cloud group had investors worried.
Adobe (ADBE) fell 1.8% in mid-day trading, while Snowflake (snow) and Salesforce (Price CRM) fell 3.7% and 1%, respectively.
Other cloud-based software companies also fell, including Datadog (DDOG), which down about 7%while Oracle (ORCL) and IBM (IBM) saw the least losses.
IBM ( IBM ) is scheduled to report fourth-quarter results after the close of trading on Wednesday.
On Tuesday, Microsoft ( MSFT ) issued steady guidance that sparked debate from several Wall Street analysts about the cloud industry.
Wedbush Securities analyst Dan Ives said demand for Azure, Microsoft’s ( MSFT ) cloud computing services is softening, with growth guidance down 30% for the March quarter which is seen as “sustainable.” At the company’s meeting, Microsoft (MSFT) executives noted that December’s decline continued, leaving Ives to consider Microsoft (MSFT) in the near future.
“The question on the Street’s mind is what does this Azure do [deceleration] The process seems to be in stages coming in very vaguely [environment],” Ives wrote to clients. Ives added that Microsoft (MSFT) has helped “clean the decks for its 2023 and 2024 fiscal years and has laid the groundwork for a” hit. [or] the best numbers in the coming stages” with the growth of Azure settling in 30%.
Jefferies analyst Brent Thill, who has a buy rating on Microsoft ( MSFT ) shares, said the guidance suggests the situation will worsen. Thill said that expectations of 4 to 5 points “decline” in the growth of fixed income, as the company issued a forecast of income of $ 50.5B to $ 51.5B. Wall Street analysts previously predicted that Microsoft ( MSFT ) would post revenue of $52.42B in its third quarter.
BMO Capital Markets analyst Keith Bachman downgraded Microsoft ( MSFT ) to outperform following the report, citing uncertainty surrounding Azure.
“Until Azure’s growth stabilizes, we see the stock as stable,” Bachman said.
Rivals Microsoft ( MSFT ) Azure Google ( GOOG ) ( GOOGL ) and Amazon ( AMZN ) fell 3.5% and 1.6%, respectively.
On Monday, Microsoft ( MSFT ) confirmed it had invested “many, many billions” in OpenAI startup ChatGPT.