$Microsoft(MSFT.US) 1Q25 first take: As the first performance report after the change in accounting standards, it will indeed affect our understanding of the details of the financial report, but it also gives us an opportunity to focus more on the overall and most critical comparable business performance of the company. From the preliminary analysis of this quarter's financial report by Dolphin Investment Research, it is a qualified submission, but there are both joys and concerns.

1) First, in terms of overall performance, total revenue grew by 16% year-on-year (with contributions from the consolidation of Activision Blizzard), continuing to slightly accelerate from last quarter's 15.2% and slightly exceeding market expectations by 1.7%. However, on the profit side, operating profit of $30.6 billion, while better than market expectations, had a year-on-year growth rate of only 13.6%, lagging behind revenue growth. The operating profit margin has decreased both year-on-year and quarter-on-quarter, officially marking the end of Microsoft's profit margin expansion phase, sliding into the profit margin contraction zone under the drag of high Capex related to AI.

2) At the same time, this quarter's Capex investment has once again increased quarter-on-quarter to a full $20 billion, nearly 8% higher than expected. We also noted that this quarter's D&A has doubled compared to the same period last year, increasing by over $3 billion. Free cash flow has seen a negative year-on-year growth of 7% under the drag of high Capex. The massive investment in AI infrastructure has begun to fully manifest pressure on financial indicators.

3) By segment, the actual revenue growth rates for Productivity (PBP) and Intelligent Cloud (IC) this quarter were in line with or slightly better than expectations, meeting targets but not surprising. In contrast, the Personal Computing segment, due to the consolidation of Activision Blizzard and strong growth in advertising business (benefiting from Copilot search), exceeded expectations by about 5%.

4) In key core businesses, Azure's growth rate was 33%, down 1 percentage point from the previous quarter, basically in line with market expectations, with no surprises. The guidance for the next quarter indicates a further slowdown of 2-3 percentage points. It does not point to continued strong demand for cloud computing due to AI; rather, it continues to decline. Combined with profits, which have begun to decrease due to Capex investment, there is only investment without a real demand explosion, which is not a good sign. Another core business, the 365 commercial cloud under PBP, grew by 15% this quarter, remaining flat with the previous quarter. According to guidance, it is also expected to slow down by about 2 percentage points next quarter, showing no increase but rather a slowdown, and no demand explosion from AI features like Office Copilot.

5) The only comforting news is that the constant currency growth rate of new commercial bookings this quarter reached 23%, up 4 percentage points from the previous quarter, suggesting that this incremental demand may indeed exist. However, it is still in the contract stage and has not yet reflected in financial indicators, with hopes for future release.