Despite an earnings beat, Microsoft Corp. shares fell in after-hours trading as the company's cloud-computing revenue came in lower than expected.

The most important business for Microsoft is its cloud-computing business, which has grown into the largest and most important business for the company. Concerns about cloud growth have been raised as the U.S. faces its first possible recession since the technology became ubiquitous.

The Intelligent Cloud segment had first-quarter revenue of $20.3 billion, up from $16.96 billion a year ago but slightly lower than the average analyst estimate. According to FactSet, Microsoft said that Azure grew by 35 percent.

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The 50% growth shown in the same quarter last year is a stark contrast to the 40% growth shown in the previous quarter. Microsoft only reports percentage growth for its core cloud-computing product.

Microsoft reported fiscal first-quarter earnings of $17.56 billion, or $2.35 a share, down from $2.71 a share in the same quarter a year ago. The revenue increased to $50.1 billion. The average estimate of analysts was earnings of $2.31 a share on sales of $48.66 billion.

Microsoft shares fell between 1% and 2% in after hours trading after the results were released. Microsoft stock tends to go up in after-hours trading after executives give a forecast for the current quarter in their conference call. It goes all the way up to the Eastern time zone.

Microsoft confirmed layoffs of fewer than 1,000 employees earlier this month due to a weakened macroeconomic climate. Microsoft has suffered from the strengthening dollar, as well as a sharp downturn in personal- computer sales, which spiked during the Pandemic, but are now showing record regression.

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Microsoft reported PC revenue of $13.3 billion for the quarter, roughly unchanged from a year before and beating the average analyst estimate of $13.12 billion, according to FactSet. As cloud computing has grown in importance, the importance of the company's financials has declined.

In a preview of the report, Bernstein analysts said that Windows was a large driver of Microsoft revenue and that it was a disproportionate driver of earnings. The relative impact of Windows has decreased over time as other businesses have grown faster.

The Productivity and Business Processes segment of Microsoft had revenue of $16.5 billion, which was higher than the average analyst estimate of $16.13 billion. Microsoft has core cloud-software properties such as its Office suite of products, as well asLinkedIn and some other properties.

Microsoft's second-quarter guidance will be crucial to investors hoping that the tech giant can survive any economic shocks. According to FactSet, analysts were expecting overall second-quarter revenue of $56.16 billion and "Intelligent Cloud" sales of $21.84 billion, but they would like to hear more from Microsoft executives.

MoffetNathanson analysts, who have a "market perform" rating and $282 price target on the stock, hope that management will provide a bit more color on full-year fiscal 2023 beyond just the double-digit revenue growth and operating margins being roughly flat commentary from last quarter. Office revenue is expected to see an increase in headwinds in the coming quarters, but volume businesses likeAzure are more resilient.

Microsoft stock has declined 25.5% so far this year, as the S&P 500 index has dropped 20.3% and the DJIA has declined 13.3%.