Microsoft beats earnings expectations despite cloud growth slowdown

Microsoft announced its Q2 earnings after the bell on Tuesday, beating on expected earnings per share. Despite the beat on earnings per share, Microsoft’s cloud business continued to slow in the quarter. The company reported its Intelligent Cloud segment grew 18% in the quarter, while its Azure services grew 31%.

Microsoft’s announcement follows news that the company is engaging in a multi-year, multi-billion-dollar investment in OpenAI in an attempt to better tackle competitors including Amazon and Google.

The investment is expected to help Microsoft further differentiate its cloud offerings from competitors like Amazon and Google. The company is also said to be bringing the technology to its Bing search engine, a move that could threaten Google’s search dominance.

Microsoft cut 10,000 workers just last week as the company is dealing with flagging PC sales. Windows OEM revenue, which is the amount Microsoft makes on sales of its operating system to PC makers fell 39% year-over-year.

The company is also continuing in its effort to purchase video game giant Activision Blizzard for $69 billion. So far, the Federal Trade Commission, the U.K’.s Competition and Markets Authority, and the E.U.’s European Commission have either lodged complaints about ,or are outright working to scuttle, the deal.

Revenue: $52.7 billion versus $52.9 billion expected

Adjusted EPS: $2.32 versus $2.30 expected

Productivity and Business processes: $17 billion versus $16.8 billion expected

Intelligent Cloud: $21.5 billion versus $21.4 billion expected

More Personal Computing: $14.2 billion versus $14.7 billion expected

Shares of Microsoft were up more than 4% immediately following the news.