Microsoft‘s better-than-expected earnings report wasn’t sufficient to forestall the inventory’s steepest sell-off in two years, as traders as a substitute centered on the corporate’s forecast for the present interval.

Microsoft shares fell 6% on Thursday and headed for his or her worst day since Oct. 26, 2022, after they dropped 7.7%. That was a month earlier than the general public launch of ChatGPT from Microsoft-backed OpenAI, a launch that set the stage for a increase in synthetic intelligence investments.

For the interval ending in December, Microsoft referred to as for income within the vary of $68.1 billion to $69.1 billion, implying 10.6% development on the center of the vary. Analysts surveyed by LSEG had been on the lookout for $69.83 billion in income.

Income in Microsoft’s cloud infrastructure enterprise, Azure, elevated 33%. CFO Amy Hood stated on a name with analysts that development, in fixed foreign money, will are available at 31% to 32% within the fiscal second quarter.

On Tuesday, Google reported 35% annual development in its rival cloud enterprise to $11.35 billion. Amazon, which leads the cloud infrastructure market, is scheduled to report outcomes after the shut on Thursday.

“We view Q1 outcomes as strong throughout the core Azure and Workplace development companies, although tempered by a softer Q2 outlook,” analysts at BofA International Analysis wrote in a report on Thursday. They nonetheless advocate shopping for the inventory.

Fiscal first-quarter income elevated 16% from a yr earlier to $65.59 billion, exceeding the common analyst estimate of $64.51 billion, based on LSEG. Earnings per share of $3.30 topped the $3.10 common estimate.

Web earnings rose 11% to $24.67 billion from $22.29 billion within the year-ago quarter.

Exterior suppliers are late in delivering information heart infrastructure to Microsoft, which means the corporate will not be capable to meet demand within the fiscal second quarter.

“I really feel fairly good that going into the second half of even this fiscal yr, that a few of that supply-demand will match up,” CEO Satya Nadella stated on the earnings name.

Microsoft’s AI investments proceed to be a serious focus for traders, as the corporate builds out its infrastructure and ramps up chip spending to deal with heftier workloads. Microsoft has invested near $14 billion in OpenAI, which was valued at $157 billion in a financing spherical earlier this month.

Hood stated on the decision she expects the corporate to take a $1.5 billion hit to earnings within the present interval, primarily due to an anticipated loss from its funding within the AI startup.

In the meantime, spending on property and tools grew 50% yr over yr to $14.92 billion. The consensus amongst analysts polled by Capital IQ was $14.58 billion.

As of Thursday’s shut, Microsoft shares had been up just a little over 8% for the yr, whereas the Nasdaq has risen 21% throughout the identical interval.

— CNBC’s Ari Levy contributed to this report.