The Biggest Reason Microsoft’s Earnings Report Was a Disappointment | The Motley Fool

At first glance, Microsoft‘s (MSFT +1.62%) fiscal third-quarter results look strong. Revenue rose 18% year over year to about $83 billion. And operating income surged 20% year over year, or 16% in constant currency.

So why did the stock fall about 5% the next day — and why is it still down about 14% year to date with shares around $413 as of this writing?

A closer look reveals one element I think may be weighing on the stock. Two of the cloud computing and AI giant’s most-watched growth indicators — the commercial backlog and the headline Azure growth rate — failed to impress in fiscal Q3. Indeed, you could argue that they are showing signs of stalling. And that’s a problem, given how much management is now committing to spend.

A backlog that hardly moved (sequentially)

Microsoft’s commercial remaining performance obligations (RPOs), or the dollar value of contracted commercial work that has not yet been recognized as revenue, came in at $627…