Shares of Microsoft (MSFT) are falling more than 5% in after-hours trading on Tuesday after the company reported its fiscal fourth quarter results, revealing its intelligent cloud segment missed expectations.

RBC Capital Markets Software equity analyst Rishi Jaluria joins Asking For A Trend to give insight into Microsoft's results.

Jaluria says his biggest takeaway from the report was that there has been "a little bit of a reversal of the trends that we saw last quarter." He says the issue is that Azure "ex-AI" decelerated in this quarter whereas it had accelerated the prior quarter. He says he will be looking for more information about the company's capital expenditures outlook on the call.

In terms of what to expect with the AI sector Jaluria states: "I think what we're learning is it's very early in AI. Capex is going to be through the roof because this AI is really capital intensive. It's totally resource intensive. And there is a little bit of an air pocket behind enterprises having discussions in AI and actually using AI widely within the organization. And at the same time, I do think we are seeing some competitive dynamics where Azure may be potentially gaining share versus the other hyperscale cloud providers."

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This post was written by Nicholas Jacobino