Microsoft Shares Slide After Disappointing Cloud Forecast and AI Spending Worries

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Microsoft’s shares dropped 4.5% in after-hours trading on Wednesday after the company issued a disappointing growth forecast for its cloud computing business, particularly Azure. Despite exceeding sales expectations for the fiscal second quarter, investors expressed concerns about the company’s large spending on artificial intelligence (AI) and the potential competition from cheaper AI models emerging from China.

The cloud unit, Azure, reported 31% growth in the quarter, falling short of Wall Street’s expectations of 31.8%. Microsoft’s capital expenditures were also higher than analysts anticipated, reaching $22.6 billion, compared to the forecasted $20.95 billion.

Although Microsoft’s AI investments have led to improved performance, including a 10-fold better price-to-performance ratio, analysts are looking for clearer evidence of monetization. Despite being optimistic about AI’s future potential, Microsoft CEO Satya Nadella acknowledged that the company is still in the early stages of realizing profits from these technologies.

The rise of DeepSeek, a Chinese AI startup, has intensified concerns about increased competition in the AI market, potentially leading to a price war. Microsoft has already added DeepSeek’s AI models to its Azure offerings, highlighting the growing pressure from rivals offering cheaper AI alternatives.

However, Microsoft remains a strong player in the AI space, securing new Azure contracts, including those with OpenAI, which has helped the company achieve significant commercial bookings growth of 67%. Microsoft’s total revenue for the fiscal second quarter was $69.6 billion, reflecting a 12% increase, while earnings per share were reported at $3.23, surpassing analyst expectations of $3.11.

Despite the uncertainty surrounding AI spending and competition, Microsoft continues to be viewed as a key player in the AI sector, with its stock rising 8% over the past year, although trailing behind competitors like Alphabet and Amazon in performance.

 

Mexico President Condemns Google’s Name Change of Gulf of Mexico

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Mexican President Claudia Sheinbaum expressed her disapproval on Thursday over Google’s decision to change the name of the Gulf of Mexico on its Google Maps platform. This move followed U.S. President Donald Trump’s order to rename the body of water to the “Gulf of America.”

In a letter addressed to Google, Sheinbaum’s government argued that the United States cannot unilaterally rename a body of water that it shares with both Mexico and Cuba. The change would apply only to U.S. users of Google Maps once it is officially updated in the U.S. Geographic Names System. For users in Mexico, the name “Gulf of Mexico” will remain, while internationally, both names will be shown.

The conflict between Sheinbaum and Trump over the name change has escalated, with Sheinbaum previously jesting that, if countries were to start renaming geographical locations, North America should be renamed “Mexican America,” referencing a 1607 map of the region.

Mexico’s position is based on the United Nations Convention on the Law of the Sea, which asserts that a country’s sovereignty only extends 12 nautical miles (about 22 kilometers) from its coastline. As a result, Sheinbaum emphasized that the U.S. could only change the name of the Gulf within its own 12 nautical miles, not beyond that.

In her morning press conference, Sheinbaum reiterated that Mexico had requested Google to feature the term “Mexican America” when searched. She called for Google to prominently display this on its platform as part of the broader conversation about territorial naming rights.

 

India’s IT Minister Praises DeepSeek’s Low-Cost AI, Draws Parallels with IndiaAI Mission

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India’s IT minister, Ashwini Vaishnaw, has praised Chinese startup DeepSeek for its groundbreaking low-cost AI assistant, highlighting the startup’s frugal approach as a model that resonates with India’s own AI ambitions. Speaking at an event in Odisha, Vaishnaw drew a comparison between the $5.5 million investment DeepSeek used to create a powerful AI model and India’s $1.25 billion commitment to the IndiaAI mission.

The IndiaAI mission, announced in March, aims to develop a robust AI ecosystem by funding startups and creating the necessary infrastructure to support AI innovation. Vaishnaw’s comments came as he pointed out the cost-effectiveness of DeepSeek’s approach, which took just two months and under $6 million to develop its AI model using Nvidia’s less-advanced H800 chips.

DeepSeek’s success has been a game-changer in the AI sector, surpassing OpenAI’s ChatGPT in downloads on Apple’s App Store. The startup’s impressive performance challenges the prevailing belief that China is far behind the U.S. in the AI race and raises questions about the high costs traditionally associated with building AI models.

Vaishnaw’s statement also appeared to counter remarks made by OpenAI CEO Sam Altman during a visit to India last year. Altman had expressed skepticism about India’s ability to develop a competitive AI model on a $10 million budget, calling it “totally hopeless” to compete on training foundation models. Vaishnaw’s comments are now drawing attention, especially as Altman is set to visit India again in early February amid a legal battle with Indian digital news and book publishers over copyright issues.