Microsoft revenue hits $90 billion as Azure crosses $100 billion milestone despite record AI spending

Microsoft's cloud brings rain of revenue

Microsoft on Wednesday reported $90 billion in revenue for the quarter ended June 30, an increase of 18 percent, lifting its stock more than 7 percent in after hours trading. The cash intake was more than Wall Street analysts anticipated, and showed up where it counted - the company's cloud business and AI services. Microsoft Cloud revenue reached $59.3 billion, up 27 percent year-over-year, and its Azure business revenue grew 43 percent. Meanwhile, Microsoft 365 Copilot's paid user base increased 50 percent from the previous quarter. "We are advancing the frontier on the cost-to-outcome curve, ensuring every customer can turn tokens into business results," said Satya Nadella, chairman and chief executive officer of Microsoft, in a statement celebrating the results for the final quarter of Microsoft's 2026 fiscal year. "This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation." Thirty million out of an estimated 450 million Microsoft 365 commercial customers isn't an overwhelming vote of confidence in Copilot AI, but it's something, particularly given Microsoft's imposition of usage-based billing on top of seat-based charges. Operating income for the quarter came to $40.6 billion (+18 percent). And net income was $35.8 billion (+31 percent), for diluted earnings per share of $4.81 (+32 percent). Microsoft's investment in Anthropic accounted for a gain of about $3.2 billion this quarter. For the full fiscal year that ended June 30, 2026, revenue reached $331.8 billion, up 18 percent, with operating income at $155.2 billion (+21 percent), net income at $133.7 billion (+31 percent), and $17.95 EPS (+32 percent). The results were enough to assuage concerns about Microsoft's enthusiastic capital spending, which reached $41 billion, up 70 percent from a year earlier and about 28 percent more than $31.9 billion reported last quarter. Some of the shareholder optimism may be attributable to Microsoft's use of finance leases, which allow the company to invest in datacenters without paying immediately. During Microsoft's investor conference call, CFO Amy Hood said that about two-thirds of the company's capex took the form of short-lived assets like CPUs and GPUs. Finance leases accounted for about $5.6 billion of capex, she said. Microsoft claims to have a lot of potential customers waiting in the wings to use datacenters it is currently building. "Commercial remaining performance obligation grew 84 percent to $678 billion," said Hood, noting that customer demand for cloud services exceeds available capacity. "Microsoft's capex number is arguably the most closely watched line in this report, and it arrived with a case for optimism rather than alarm," said Emarketer analyst Gadjo Sevilla in a statement provided to The Register. "Microsoft spent $35.80 billion on property and equipment during fiscal Q4, more than double the $17.08 billion in the year-ago quarter, bringing full-year capital expenditures to $115.95 billion - up nearly 80 percent from $64.55 billion in fiscal 2025. Despite that spending pace, the company still generated $55.44 billion in quarterly operating cash flow, up 30 percent YoY, a positive sign the AI buildout isn't cannibalizing the core business." While Microsoft enjoys strong revenue, concern about potentially unrequited AI spending - exemplified by Meta's disappointing financial results - continues to linger. Fitch Ratings on Monday warned that the possibility of an AI market correction has emerged as a major credit risk. "The combination of revenue uncertainty and the extent to which capital markets and economies have become intertwined with AI have created a vulnerability for credit in the event of a re-evaluation of long-run returns potential," the financial biz said. "Very short-term spikes in market volatility for individual equities and tech-heavy stock indices have already occurred, but a larger, more protracted correction could have wider market, macro and credit effects depending on its scale, duration and contagion." ®

Microsoft's cloud business boosts sales as AI investment climbs to $41bn

Microsoft's sales rose 18 per cent to $90bn in the three months to the end of June, ahead of analysts' expectations of $87.7bn, as the tech group's cloud business continued to accelerate. Sales in the tech group's intelligent cloud segment, which houses its Azure platform, rose 32 per cent to $39.3bn. Microsoft does not put a dollar figure on Azure's sales but said it grew 43 per cent year on year, as AI demand pushed usage higher. Net income rose 31 per cent year on year to $35.8bn during the three-month period, inflated by a gain on the group's stake in AI lab Anthropic, Microsoft said on Wednesday. Chief executive Satya Nadella said Azure's revenue had surpassed $100bn over the past year and the Microsoft 365 Copilot had reached more than 30mn paid users, "reflecting the confidence customers are placing in us to power their AI transformation". Microsoft's shares are down about 17 per cent this year as investors fret over a capital spending arms race that has sapped its free cash flow as well as the durability of its software franchise in the AI era. The stock was up 3 per cent in after-hours trading. The group in April said its capital expenditure for 2026 would come in at $190bn with most of the spending falling in the back half of the year. Microsoft's capex in the quarter was $41bn, up 70 per cent year on year.

Microsoft beats Wall Street expectations with $90B in revenue

Microsoft posted strong results for its quarterly earnings on Wednesday, beating expectations and showing strong growth in its cloud computing platform and a boost in paid AI users. The Redmond, Washington, company earned $90 billion, or $4.81 per share, in the April-June quarter. That is up 18% from the same period a year earlier. Analysts surveyed by FactSet Research had expected the company to earn $4.24 per share on revenue of $87.62 billion this quarter. Microsoft Cloud revenue was $59.3 billion this quarter, up 27% year-over-year. That growth reflects the demand across Microsoft's cloud computing platform Azure, as well as its first-party AI applications and services. Azure and other cloud services revenue increased 43%. For the full fiscal year, which closed out at the end of June, the company brought in $331.8 billion in revenue. "This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation," CEO Satya Nadella said in a statement Wednesday. Investors had been looking for evidence that Azure and Copilot, Microsoft's flagship AI assistant, could eventually produce returns as concerns about high AI spending had steadily grown across the industry. "We remain very confident in the long-term return on these investments, given these strong demand signals, the increasing product usage we've seen and the efficiencies that we're driving across the platform," said Danielle Criste, Microsoft's director of investor relations, in an interview. Microsoft's shares rose nearly 3% to $402.07 in after-hours trading after the results came out.

Microsoft Azure tops $100B in annual revenue as record AI spending cuts into cash flow

Microsoft's Azure cloud business grew 43% last quarter, blowing past the company's own forecast and surpassing $100 billion in annual revenue for the first time, providing fresh evidence of the potential for artificial intelligence to fuel new growth for the tech giant. The company's results for its fiscal fourth quarter also showed the price of that growth: capital spending hit a record $41 billion, largely to support the company's AI buildout, and free cash flow sank 23% even as operating profits jumped 18%. And in a new twist, Microsoft shares rose more than 3% in initial after-hours trading, in contrast with the recent pattern in which the company's strong results were met with selloffs that pushed its stock near a one-year low. Companywide results: Overall, Microsoft reported revenue of $90 billion for the quarter, up 18% from a year ago, and net income of $35.8 billion, up 31%. Analysts had expected $87.7 billion in revenue, a figure that was already at the top of Microsoft's own guidance range. Earnings were $4.81 per share, topping the $4.24 that analysts expected. But that included a 27-cent benefit from one-time items, largely a $3.2 billion gain on Microsoft's investment in Anthropic. Even excluding those items, the company said, it exceeded expectations across revenue, operating income and earnings per share. Microsoft 365 Copilot surpassed 30 million paid seats, up from 20 million last quarter. That's still less than 7% of the roughly 450 million commercial Microsoft 365 seats, a gap that has drawn investor skepticism all year. Windows OEM and Devices revenue declined 7%, better than the roughly 20% drop Microsoft had forecast for Windows OEM alone. The company said PC makers stocking up on parts ahead of rising memory prices helped offset weaker demand for computers. Xbox content and services revenue fell 10% and Xbox hardware fell 13%. Microsoft also wrote down the value of unspecified Xbox assets. The company grouped that charge with severance costs and savings from its retirement program -- a net $500 million hit to operating income -- and declined to say how much of it was Xbox or what was written down.

Microsoft Q4: Azure tops $100bn, AI bet mostly pays off

Microsoft's cloud growth reaccelerated in the fourth quarter, with Azure up 43% and full-year Azure revenue passing $100bn for the first time. The backlog jumped to $678bn, and demand is broadening beyond AI labs. But capital spending hit $35.8bn in the quarter alone, and a one-off Anthropic gain flattered the profit line. The verdict on Microsoft's AI spending: good, but not great. Microsoft went into its earnings facing one question: is the vast AI spending working? The numbers said yes, mostly. Revenue rose 18% to $90bn for the quarter to 30 June, and net income climbed 31% to $35.8bn, the company reported. Microsoft Cloud brought in $59.3bn, up 27%. The shares rose about 2% after hours. Azure reaccelerated The figure investors watch is Azure, and it beat. Azure and other cloud services grew 43% year on year, ahead of the 40% expected and up from 40% the quarter before, CNBC reported. For the full financial year, Azure passed $100bn in revenue for the first time. That acceleration matters because Microsoft has been short of computing power. It has been so stretched for capacity that it has had to ration chips between Azure customers, its own research, and Copilot. Growing 43% through that squeeze is the quarter's real signal. The backlog is broadening The demand is not only from AI labs. Microsoft's commercial backlog, the revenue it has booked but not yet recognised, jumped 84% year on year to $678bn. It said the quarter's sequential growth came from customers other than the big model developers. That matters because of concentration. Microsoft said in January that about 45% of the backlog then was tied to OpenAI. Signs of other customers signing up ease the worry that one partner underwrites the whole story. Paid seats for its Microsoft 365 Copilot assistant passed 30 million, up from 20 million in July. The bill keeps climbing The cost of that growth is not falling. Microsoft spent $35.8bn on property and equipment in the quarter alone, more than double the $17bn it spent a year earlier. For the full year, that capital spending reached about $116bn. Investors have been uneasy about exactly this. The stock is down 19% this year as the spending climbed, and rivals are pouring in similar sums. The relief in the small after-hours pop is that, for now, the revenue is keeping pace with the outlay. Good, but not great The profit jump needs an asterisk. Net income grew 31% on paper, but a one-off $3.2bn gain on Microsoft's stake in the AI lab Anthropic helped lift it. On the company's own measure that strips out its OpenAI investment swings, profit grew 22%. Costs also came in lower thanks to Microsoft's first voluntary retirement programme, partly offset by an Xbox writedown. So the read is mixed. AI cloud demand is clearly real and broadening, but the spending that fuels it keeps rising, and the build-out still needs paying for.

Customers encouraged to take a multi-model approach to AI as Microsoft's infrastructure CapEx soars 70%

A strong end to its current fiscal year kept Wall Street happy with Microsoft, despite a 70% year-on-year increase in CapEx to fund AI infrastructure expansion. Total Q4 revenue of $89.5 billion dollars was up 17% year-on-year, while net income rose 24% at $27.2 billion. Revenue from Microsoft Cloud grew 27% to $56.5 billion dollars, within which Azure revenue was up 39%. It was a strong end to the fiscal year, said CEO Satya Nadella: All up, our annual revenue surpassed $331 billion, up 18%. Microsoft Cloud surpassed $214 billion, up 27% and Azure surpassed $100 billion, up 41%. Going forward, we have two goals; first, ensuring AI empowers every person, amplifying their agency and ambition; and second, empowering every organization to build their own continuous learning loop and ensuring that they don't outsource their core IP. CapEx spend In terms of the CapEx to fund AI infrastructure growth, spend for the quarter hit $41 billion, roughly two-thirds of which went on 'short-lived assets', primarily CPUs and GPUs. Nadella confirmed that the firm's expansion plans remain on track, despite the negativity from Wall Street: We added 31 new data centers across five continents this quarter, bringing the total to 88 this year as we expand our footprint in response to accelerating demand. We are also bringing capacity online faster than ever. Over the last fiscal year, we have reduced dock-to-live times for new GPUs in our largest regions by nearly 50%. All up, we added another gigawatt of capacity this quarter and remain on track to roughly double our overall capacity in just two years. We're also getting more from the infrastructure we already have by optimizing across silicon, systems, and software. For example, we increased the throughput for Copilot workloads 4x since the start of the year. Copilot use remains on the rise, according to Nadella: The number of conversations per user nearly doubled year-over-year. Average weekly engagement is on par with Outlook and Teams. And the time from deployment to what we think of as high usage, meaning monthly active usage about 80% across a customers' user base, has fallen from months to just days over the past year. The number of customers with more than 50,000 seats increased over 7x year-over-year, and the number of enterprise customers deploying Copilot to the majority of their information workers grew nearly 75% quarter-over-quarter, a signal of how central Copilot has become to their operations. NHS England, for example, is rolling out Copilot to 505,000 clinicians and staff, the largest health care deployment of its kind after a trial showed it saved employees an average of 43 minutes per day. KPMG is expanding its deployment across its global workforce of more than 276,000 professional, and HSBC committed to 200,000 seats to accelerate its workforce transformation. Model mantra The current attention being paid to the need to have sovereign tech capabilities is also a focus, Nadella confirmed: AI sovereignty is increasingly top of mind for our customers, and we are expanding our offerings to meet that need. Just last week, we announced a partnership with Mistral to bring its models to Microsoft Sovereign Cloud, enabling customers to run them across public, customer-controlled, and fully dis-connected environments. Model choice is important to customers, he added: Every customer wants the right model for each task based on quality, latency, cost, and compliance. We offer the broadest model catalog in the cloud with over 11,000 models, including the latest from OpenAI, Anthropic, Mistral, xAI, as well as our own MAI family. Since the start of the year, we have seen 5x increase in the number of customers building with models from multiple providers. Levi Strauss & Co., for example, is using models from OpenAI and Anthropic on Foundry as it brings more than 1,000 domain-specific agents into a unified enterprise AI platform. We are also accelerating our own model development. We announced more than a dozen new models across image, voice, transcription, coding, security, including our first reasoning model MAI-Thinking-1, all with cost-efficient inference at the core for the enterprise use cases. We are co-designing these models with our silicon, and we are seeing 40% better performance per watt when running MAI models on Maia 200. But more importantly, we are building a new model system where the harness, context, memory, and action space are separate from any one model family, thereby moving the frontier on the cost-to-outcome curve. There are important lessons being learned here, said Nadella: We are very, very clear about the architectural design of the platform, which is you've got to keep your harness separate from the model. When the harness will ensure that your memory, your context, all of that is external. That means any given model at any given time is swappable. You should and you can use frontier models. There's no reason not to. But you also can use multiples of them. So if you look at some of the stats I gave. It's a great example of how to use the frontier models for what they deliver, how to use low-cost models for what they deliver, and in fact, train your own model when you don't want to use any external model itself because after all, you have all the output, you have all the traces, you have all the context. That's really the enterprise design architecture that we are going to evangelize. My take A good end to the year for Microsoft, with Wall Street short-termists diverting their panic attacks in the direction of Meta which reported its numbers within hours of Nadella's firm.

Microsoft Beats Wall Street Expectations With $90B in Revenue

Microsoft posted strong results for its quarterly earnings on Wednesday, beating expectations and showing strong growth in its cloud computing platform and a boost in paid AI users. The Redmond, Washington, company earned $90 billion, or $4.81 per share, in the April-June quarter. That is up 18% from the same period a year earlier. Analysts surveyed by FactSet Research had expected the company to earn $4.24 per share on revenue of $87.62 billion this quarter. Microsoft Cloud revenue was $59.3 billion this quarter, up 27% year-over-year. That growth reflects the demand across Microsoft's cloud computing platform Azure, as well as its first-party AI applications and services. Azure and other cloud services revenue increased 43%. For the full fiscal year, which closed out at the end of June, the company brought in $331.8 billion in revenue. "This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation," CEO Satya Nadella said in a statement Wednesday. Investors had been looking for evidence that Azure and Copilot, Microsoft's flagship AI assistant, could eventually produce returns as concerns about high AI spending had steadily grown across the industry. "We remain very confident in the long-term return on these investments, given these strong demand signals, the increasing product usage we've seen and the efficiencies that we're driving across the platform," said Danielle Criste, Microsoft's director of investor relations, in an interview. Microsoft's shares rose nearly 3% to $402.07 in after-hours trading after the results came out.

Microsoft's AI-Fuelled Rally: 5 Reasons Wall Street is bullish again

Microsoft's latest earnings reignited Wall Street's AI optimism as Azure outperformed, cloud demand accelerated and a record order backlog strengthened confidence that the company's multibillion-dollar AI investments are beginning to pay off. Microsoft becomes Wall Street's most valuable company Microsoft reclaimed the title of the world's most valuable listed company after a blockbuster rally following its latest earnings. The stock added nearly $450 billion in market value in a single session, overtaking Nvidia as investors cheered stronger-than-expected AI and cloud growth. (Sources: Reuters, Yahoo Finance, AOL) Azure growth crushes expectations The biggest catalyst was Azure, Microsoft's cloud platform, which delivered stronger-than-expected revenue growth as enterprises accelerated AI adoption. Robust demand for AI infrastructure eased investor concerns that Microsoft's massive AI spending was weighing on returns. US MarketsPowered By As on 01 Aug 2026, 01:30 AM IST S&P 500 Top Gainers Amazon.com271.58(15.32%) DexCom83.45(11.95%) Monolithic Power Systems1,426(8.35%) Eaton Corp415.20(7.32%) Gainers" S&P 500 Top Losers GoDaddy82.74(-16.70%) Corteva78.71(-11.90%) Coinbase Global146.26(-10.59%) Coterra Energy32.56(-8.62%) Losers" $678 billion backlog boosts confidence Microsoft also disclosed a record commercial order backlog of around $678 billion, highlighting strong long-term demand for its cloud and AI services. The massive backlog reassured investors that future revenue visibility remains strong despite aggressive capital expenditure plans. AI investments begin paying off For months, Wall Street questioned whether Microsoft's multibillion-dollar AI investments would generate meaningful returns. The latest results suggested those bets are translating into accelerating cloud growth, stronger enterprise demand and improving monetisation of AI-powered services, driving renewed optimism. What investors are watching next While Microsoft's outlook has strengthened, investors will closely track whether AI-driven demand remains durable, Azure can sustain elevated growth and heavy capital spending continues delivering higher revenue and margins. The company's execution will remain a key barometer for the broader AI trade.

Microsoft Stock Surge: Analyst Highlights Expanding Cloud Footprint and OpenAI Momentum - Microsoft (NASD

The latest earnings snapshot showed a 14th straight "double beat," with quarterly revenue of $90.01 billion (+18%) and EPS of $4.74 topping consensus. The overall cloud revenue rose 27% to $59.3 billion. Intelligent Cloud revenue climbed 32% to $39.3 billion, and Azure and other cloud services revenue grew 43%, helping frame why buyers are still willing to pay up for the AI/cloud story. BNP Paribas analyst Stefan Slowinski said Microsoft strengthened its position as a leading AI beneficiary after fiscal fourth-quarter results showed progress across Azure, Microsoft 365 Copilot, GitHub Copilot and AI infrastructure. AI Monetization Gains Traction Slowinski said Microsoft's fiscal fourth-quarter results addressed nearly every major investor concern going into the report and helped shift sentiment around the stock. The analyst said Azure again outperformed, while Microsoft also showed more tangible AI monetization across the software stack through Microsoft 365 Copilot and GitHub Copilot, as well as across the infrastructure stack through Azure. He said Microsoft now has several potential upside drivers, including broader use of usage-based pricing in Microsoft 365 Copilot, more E7 attach opportunities, higher GPU rental pricing and stronger OpenAI momentum in July. Azure Growth Could Accelerate Slowinski said Microsoft's fiscal first-quarter 2027 Azure guidance of 45% reinforces the company's acceleration path. The analyst said Azure growth could move toward the high-40% range by the second quarter of fiscal 2027 as more AI capacity comes online and demand remains strong. He raised his fiscal 2027 constant-currency Azure estimate to about 44% from roughly 41%. He said that forecast assumes only modest growth in quarterly net new Azure revenue in the second half of fiscal 2027. On capital spending, Slowinski said Microsoft maintained its calendar 2026 cash capex outlook, but he now forecasts about $220 billion of capex in fiscal 2027, down from his prior $260 billion estimate. The analyst linked the lower forecast partly to accounting lease changes and management's commitment to remain free-cash-flow positive in fiscal 2027. Price Forecast Stays At $549 Slowinski reiterated an Outperform rating and kept his $549 price forecast, implying 22% upside from the July 30 price of $451.10. The analyst said BNP made modest EPS estimate changes to reflect a slightly higher tax rate and management's fiscal 2027 operating-margin commentary. He values Microsoft using a sum-of-the-parts framework with a 25-times fiscal 2028 price-to-earnings multiple and includes the company's stake in OpenAI. Top ETF Exposure Significance: Because MSFT carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock. Price Action MSFT Stock Price Activity: Microsoft shares were up 2.54% at $462.56 at the time of publication on Friday, according to Benzinga Pro data. Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Microsoft CEO Nadella Touts AI Model Choice, Resilience

'If a firm is a learning machine, they need their own learning machine. Models are an input, not some extraction of the knowledge of the enterprise,' Microsoft CEO Satya Nadella said on the company's fourth fiscal quarter earnings call. Microsoft Chairman and CEO Satya Nadella touted his company's products and services as the best interaction layers for any variety of artificial intelligence models while maintaining control over their data and intellectual property. Nadella's goal is enabling customers to "be in control of their own destiny in terms of what I describe as building their human capital and their token capital," the CEO said on Wednesday's fourth fiscal quarter earnings call for the Redmond, Wash.-based technology giant. He predicted that more and more AI users will choose vendors that prove they are not using company knowledge to benefit themselves. "If a firm is a learning machine, they need their own learning machine," Nadella said. "The models are an input, not some extraction of the knowledge of the enterprise." Microsoft reported results for its fourth fiscal quarter on the call, covering the three months ended June 30. [RELATED: Microsoft's Nicole Dezen Unveils New Partner Strategy Built Around AI Transformation Zac Paulson, vice president of technology at Fargo, N.D.-based Microsoft solution provider ABM Technology Group -- a member of CRN's 2026 MSP 500 -- told CRN in a recent interview that ABM's security offerings have seen high demand lately, with customers concerned about the volume of attacks and new attack surfaces in the AI era. "AI has notched up the threats, so people are more cognizant about what to worry about," Paulson said. Paulson said he has also been impressed with Microsoft's ongoing advancements in its Copilot AI tool and that Microsoft's communications application Teams has been growing in adoption as a phone system in a non-AI business opportunity and speaking to Microsoft's value-add as a one-stop productivity vendor. "It is emotionally taxing to have 27 different places you have to go [to for IT products]," Paulson said. "We can make the Microsoft ecosystem the one place -- which is always where Microsoft has shined. Their Office products, everything works." Microsoft Pushes Multimodel AI Strategy One of Microsoft's major differentiators in the AI race is through separating AI harnesses from the models to differentiate its architecture, Nadella said. The harnesses keep memory and context external and allow users to swap in any model they want at any given time, perhaps a nod toward the commoditizing nature of AI models. While some AI vendors advocate open-source and small language models as a way to reduce costs, Nadella said enterprises shouldn't avoid frontier models outright. "There's no reason not to [use large models]," he said. "You also can use multiples of them" in addition to low-cost models and client-made models. "We want to democratize that design pattern so that every enterprise can use it," the CEO said. Nadella pointed to the recent incident of OpenAI models autonomously compromising model platform Hugging Face as an example of why users shouldn't depend on one model. "You will maybe need multiple models to even remediate some challenges that get caused by one model," Nadella said. "You can't be subject to the refusals of one model." Microsoft's AI model catalog now includes more than 11,000 models, including those from OpenAI, Anthropic, Mistral, Elon Musk's xAI and first-party ones. The number of customers using models from multiple providers has grown fivefold since the start of the year, Nadella said. Although Nadella spoke to the importance of leveraging models by multiple makers, he still pointed to efficiencies users can achieve by leveraging Microsoft models with Microsoft products and services. "We are building a new model system where the harness, context, memory and action space are separate from any one model family, thereby moving the frontier on the cost to outcome curve," Nadella said on the call. "It's not just about cost. It also has the added benefit of business continuity and resilience because every model is substitutable." Nadella said that millions of developers, for example, have used Microsoft AI's MAI-Code-1-Flash model on GitHub Copilot to achieve higher acceptance rates and 10 percent lower median token usage while still having access to OpenAI and Anthropic models. In another example, users of Microsoft's classic Excel spreadsheet application can use Microsoft's MAI-Code-1-Flash model for a comparable quality to OpenAI's GPT-5.6 model for common tasks at lower costs. In security, the MAI-Cyber-1-Flash model has seen better performance than Anthropic's Mythos model at half the cost when combined with Microsoft's multi-agent security harness, the CEO said. "For whatever reason, if a given model goes away then you can't be left high and dry -- you need to be able to still continue your cyber operations," Nadella said. "It is cost and resilience [that are] both important criteria. And that's what we are trying to build in, whether it's in code, whether it's in cyber, whether it is in knowledge work." Copilot Tops 30 Million Paid Seats As Nadella traditionally does, he shared a variety of product usage milestones to show Microsoft's growth across different categories. In database products, Microsoft saw PostgreSQL revenue grow 55 percent year on year, accelerating for the third consecutive quarter, the CEO said. The number of PostgreSQL customers also using Microsoft's Foundry platform for building, deploying and governing generative AI applications and autonomous agents increased 80 percent. Microsoft now has more than 40,000 paid Foundry customers, up more than 60 percent year over year. Revenue more than doubled year over year, with the number of Foundry customers at a 1 trillion token annualized run rate increasing fourfold year over year, the CEO said. More than 17,000 customers use Foundry with Microsoft's Fabric data storage and processing service, up 60 percent year over year. Tens of thousands of customers, including nearly 90 percent of the Fortune 500, are grounding agents in enterprise context with Microsoft Foundry, Fabric and the Work IQ organizational intelligence and context layer behind Microsoft 365 Copilot. Other product and service milestones include: * The vendor's Rayfin backend-as-a-service (BaaS) platform and agent-first software development kit (SDK) has more than 2,500 customers. * Only two months after the launch of Agent 365, the agent control plane has nearly 40 million agents registered across tens of thousands of companies. * Microsoft now has more than 30 million paid Microsoft 365 Copilot seats, with net seat adds more than doubling quarter over quarter. * Over the last three quarters, user satisfaction scores for Copilot have doubled and are at an all-time high. * During the quarter, Microsoft cut Copilot latency by 25 percent. * The number of conversations per user nearly doubled year over year. * Average weekly engagement is on par with Outlook and Teams. * The time it takes customers to reach what Microsoft considers "high usage" -- about 80 percent monthly active use across a user base -- has fallen from months to days over the past year. * The number of customers with more than 50,000 Copilot seats increased more than sevenfold year over year. * The number of enterprise customers deploying Copilot to the majority of their information workers grew nearly 75 percent quarter over quarter. * Two months after the launch of the E7 license, hundreds of enterprise customers have purchased millions of seats. * GitHub Copilot now has 50 million users. * Copilot revenue accelerated more than 60 percent quarter over quarter. * GitHub now has 225 million users, including more than 90 percent of the Fortune 500. * Purview has audited more than 15 billion Copilot interactions to meet compliance obligations, more than a quadruple percent year over year. * Microsoft is on pace to automate more than 100 million health-care patient encounters this calendar year. CRN 2026 Solution Provider 500 members Infosys, Tata Consultancy Services (TCS) and Wipro received acknowledgement from Nadella on the call for each purchasing 60,000 or more Copilot seats. The new Microsoft Frontier Co. forward-deployed engineering (FDE) organization of 6,000 embedded industry and engineering experts so far has completed 330 projects across 164 customers, Nadella said. The CEO also held up Microsoft's emerging licenses plus consumption pricing model as a powerful total addressable market amplifier, with Copilot leveraging both pricing models. The vendor has been moving more products and services to a consumption or mixed pricing model. Thousands of customers are paying for and actively using the usage-based billing option in the Copilot Cowork agentic AI system for multistep projects and workflows, as one example, Nadella said on the call. Dynamics 365's usage-based credit consumption in the customer service category is up fourfold quarter over quarter. GitHub Copilot's usage-based billing introduced in the quarter did not stop business and enterprise seat growth and produced consumption revenue, Nadella said. Microsoft's newly unveiled Perception agentic security system will also be charged by consumption, Nadella said. Azure Revenue Surpasses $100 Billion Microsoft brought in $90 billion for the quarter, up 17 percent year on year ignoring foreign exchange. Azure revenue surpassed $100 billion for the first time during the quarter. Microsoft 365 Copilot surpassed 30 million paid seats. Microsoft Cloud brought in revenue of $59.3 billion, up 27 percent year on year. Microsoft still has a backlog, or commercial remaining performance obligation (cRPO) of $678 billion, up 84 percent. In a notable nod to the diversity of the client mix in that backlog, Microsoft CFO Amy Hood said on the call that all sequential cRPO growth was driven by commitments from customers outside frontier model companies like OpenAI and Anthropic. RPO increased 25 percent when excluding OpenAI. The vendor's operating income was $40.6 billion, up 18 percent. Net income came in at $35.8 billion, up 31 percent year on year, using GAAP. Without using GAAP, net income came in at $35.3 billion and increased 22 percent, according to the vendor. Microsoft's GAAP results include effects from its OpenAI investment while non-GAAP excludes those effects. Microsoft acknowledged a $3.2 billion discrete gain from its investment in OpenAI competitor Anthropic. The vendor also paid less than expected for its voluntary retirement program for employees, but Hood acknowledged that Microsoft's head count fell 2 percent year on year. Investing in AI infrastructure was a factor in Microsoft's company gross margin percentage coming down year on year to 67 percent. A greater sales shift to Azure was another factor. Microsoft spent $41 billion in capital expenditure during the quarter, with the growing cost of data center components -- which has proven disruptive to the channel overall -- a factor. Hood pointed to Microsoft's supply chain prowess as a hyperscaler as helpful in the high-priced component environment and indicated that the high prices have helped with conversations around migrating clients to the cloud to avoid buying servers on-premises. "The cloud still provides a great ROI in those types of situations," Hood said. "For the long term, you want to have pricing work for customers and for you, and so we're trying to stay focused on that as well." Microsoft Segments In Detail In Microsoft's productivity and business processes (PBP) segment, the vendor saw $37.8 billion in revenue, up 14 percent year on year. In that segment, Microsoft 365 Commercial cloud revenue grew about 14 percent year on year. The consumer cloud grew 22 percent ignoring foreign exchange. Dynamics 365 revenue grew 12 percent. Paid M365 commercial seats grew 6 percent year over year. M365 commercial products revenue increased 19 percent, ahead of expectations, Hood said. She credited the growth to large, long-duration M365 contracts that resulted in higher in-period revenue recognition from the Windows commercial on-premises business. This segment also brings in revenue from Microsoft social media network LinkedIn. Microsoft's intelligent cloud (IC) segment brought in $39.3 billion for the quarter, up 31 percent year on year ignoring foreign exchange. This segment includes Azure and other cloud services revenue, which grew 43 percent. Microsoft's more personal computing (MPC) segment brought in $12.9 billion, down 5 percent year on year ignoring foreign exchange. In that segment, Windows OEM and devices revenue fell 7 percent year on year. Hood said that the fall came in part from lower PC market demand and a high prior-year comparable from Windows 10 end of support at the time. Those results still beat her expectations as OEM and channel partners built inventory to get ahead of increasing component prices, she said. This segment also includes revenue from Xbox and search advertising. Full-Year Results, Microsoft's Fiscal 2027 Outlook For the entire fiscal year, Microsoft reported $331.8 billion in revenue, up 16 percent ignoring foreign exchange. Microsoft reported $155.2 billion in operating income, up 19 percent year on year ignoring foreign exchange. Net income using GAAP grew 31 percent to $133.7 billion. Without GAAP -- and without OpenAI impacts -- it grew 20 percent ignoring foreign exchange. For the full year, Microsoft's cloud revenue surpassed $214 billion, with nearly 90 percent of that from customers outside frontier model companies like OpenAI and Anthropic. Cloud's gross margin percentage was better than expected at 65 percent but down year over year due in part to AI infrastructure investment, Hood said. Looking ahead, Microsoft should grow revenue at least $89.85 billion, up at least 16 percent year on year. Hood still expects M365 commercial product and server product revenue to decline in the mid-single digits for the full fiscal year due in part to lapping higher transactional purchasing from the timing of product launches. She expects lower PC market demand and higher device pricing from component costs to lead to revenue decline in the high teens for the fiscal year for that business. Microsoft expects the productivity and business processes segment to bring in revenue of $36.7 billion to $37 billion, or growth of 11 percent to 12 percent. Hood said to expect M365 commercial cloud growth of about 16 percent ignoring foreign exchange. Sequential growth from Microsoft Copilot, E5 and E7 faces some mitigation from lower average revenue per user (ARPU) new seat adds in frontline worker and small- and medium-business products -- which are sold by Microsoft solution providers. The vendor does expect to see acceleration in M365 commercial cloud revenue growth through this fiscal year with premium license momentum and increased monetization from adding usage-based billing products alongside per-seat licensing, Hood said. M365 commercial product revenue should grow in the mid-single digits. M365 consumer cloud revenue should grow in the mid-teens due in part to a price increase last year. Dynamics 365 revenue should grow in the low teens, relatively stable quarter over quarter, the CFO said. The intelligent cloud segment should see revenue of $40.95 billion to $41.25 billion. Azure should grow 45 percent ignoring foreign exchange. The on-premises server business should see revenue decline in the low- to mid-single digits. In the more personal computing segment, Microsoft said to expect revenue of $12.2 billion to $12.7 billion. Windows OEM and devices revenue should decline in the low 20s. "As in prior quarters, the range of potential outcomes remains wider than normal," Hood said in reference to the impacts of higher component prices. Microsoft expects to spend more than $50 billion in CapEx as it works to meet AI demand, the CFO said. Microsoft's stock rose about 9 percent in after-hours trading Wednesday, trading at about $425 a share.

Microsoft's AI Bet Pays Off: Key Takeaways From Its Blockbuster Quarter - Microsoft delivers a blockbuster quarter

Microsoft's AI Bet Pays Off: Key Takeaways From Its Blockbuster Quarter 1/8 Microsoft delivers a blockbuster quarter Microsoft stunned Wall Street with a stronger-than-expected earnings report, sending its shares soaring nearly 16% in their biggest single-day gain since 2008. The rally added hundreds of billions of dollars to the company's market value and helped lift the broader Nasdaq as investor confidence in AI strengthened. (Sources: Yahoo Finance, CNBC, Financial Times) 2/8 Azure steals the show The biggest highlight of the quarter was Azure, Microsoft's cloud computing business, which posted growth well above analysts' expectations. Demand for AI-powered cloud services remained robust as enterprises continued investing in artificial intelligence, reinforcing Azure's position as a key growth engine. 3/8 AI investments start paying off For months, investors had questioned whether Microsoft's massive spending on AI infrastructure would eventually generate meaningful returns. The latest earnings eased those concerns by showing that AI-related investments are translating into stronger cloud revenue and supporting long-term growth. 4/8 Copilot gains traction Microsoft also highlighted increasing adoption of its Copilot AI assistants across businesses. The company is integrating AI into products such as Microsoft 365, Azure and developer tools, making artificial intelligence an increasingly important source of recurring revenue rather than just a new feature. 5/8 Investors applaud Microsoft's strategy Another reason for Wall Street's optimism was Microsoft's indication that growth in AI-related capital expenditure is likely to moderate. Investors welcomed the company's ability to expand its AI infrastructure while maintaining healthy profitability, easing fears that heavy spending would weigh on earnings. 6/8 Microsoft outshines Meta Microsoft's strong results contrasted with the market's reaction to Meta. While Microsoft impressed investors with robust cloud growth and clearer AI monetisation, Meta faced greater scrutiny over its rising AI spending and pressure on free cash flow. The differing reactions underscored that investors are now rewarding companies that can demonstrate tangible returns from AI investments. 7/8 AI rally spreads across markets Microsoft's earnings sparked a broader rally across AI-linked technology stocks. Semiconductor companies and other firms benefiting from AI demand also advanced, helping push the Nasdaq and the S&P 500 higher as investors regained confidence in the sector's growth prospects. 8/8 Why these results matter The latest quarter strengthens the case that generative AI is becoming a meaningful commercial opportunity rather than a long-term promise. Microsoft's performance suggests AI investments are beginning to deliver stronger revenues and profits, setting a high benchmark for other Big Tech companies as investors look for similar evidence of AI-driven growth.

MSFT Says the Next Phase of AI Is 'Per Seat Plus Consumption' as Copilot Usage Grows - Microsoft (NASDAQ:

Usage-Based Pricing Broadens AI Monetization During its fourth-quarter earnings call, CEO Satya Nadella said Microsoft is evolving its commercial model beyond per seat to per seat plus consumption. "We are also evolving our business model beyond per seat to per seat plus consumption, further expanding our TAM and delivering more customer value," Nadella told analysts. Finance chief Amy Hood echoed that view, saying Microsoft's expanding AI opportunity is increasingly tied to "usage and consumption growth" as more AI experiences become integrated across enterprise workflows. More AI Usage Starts With Making Copilot Indispensable Microsoft is positioning Copilot as the centerpiece of its AI strategy. Nadella said Chat, CoWork, Autopilot, and Code are coming together in what he called Microsoft's "flagship super app" for different user roles. As Copilot becomes embedded in more daily workflows, the company stands to benefit not only from software subscriptions but also from higher AI consumption across its products. Microsoft continues to ramp up AI infrastructure spending to meet demand that the company says still exceeds available computing capacity. Earnings Top Estimates As Azure Growth Accelerates The company reported fourth-quarter revenue of $90.01 billion, up 18% year-over-year and ahead of the Street consensus estimate of $87.62 billion, according to Benzinga Pro. Earnings came in at $4.74 per share, topping analyst estimates of $4.24. Overall cloud revenue rose 27% year-over-year to $59.3 billion, while Azure and other cloud services revenue climbed 43% from a year earlier. Price Action: The stock closed 0.71% lower at $390.54 on Wednesday and jumped 8.88% to $425.21 in after-hours trading following the earnings release. Benzinga edge rankings indicate MSFT has a Momentum score in the 10th percentile and a Growth score in the 56th percentile. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Microsoft shares surge 16% as AI cloud bet starts showing up in numbers

Microsoft shares surged 16% after stronger-than-expected guidance, robust Azure cloud growth and rising Microsoft 365 Copilot adoption eased concerns over AI spending. The company also forecast healthy cash generation, reinforcing investor confidence in its long-term artificial intelligence strategy and cloud leadership. Microsoft shares surged 16% after the company gave a stronger-than-expected outlook for sales and cloud growth, easing investor concerns that its heavy spending on artificial intelligence data centres may take too long to pay off. The Redmond-based company said it expects to keep generating cash through fiscal 2027 and gave a capital expenditure forecast below Wall Street estimates after changing how it accounts for long-term data centre leases. US MarketsPowered By As on 30 Jul 2026, 07:38 PM IST S&P 500 Top Gainers Lam Research301.59(19.51%) EMCOR Group800.32(19.01%) Baxter Intl28.94(16.81%) Western Digital535.59(15.92%) Gainers" S&P 500 Top Losers LKQ22.14(-16.10%) Fair Isaac1,175(-14.39%) C.H. Robinson Worldwide154.65(-10.99%) L3Harris Technologies265.49(-10.77%) Losers" The update was closely watched because Microsoft has been one of the biggest spenders in the global AI race. Investors have been asking whether the company can turn that spending into real growth without hurting cash flow. Its latest numbers gave them a stronger answer. Microsoft said revenue at Azure, its cloud-computing business, rose 43% in the fiscal fourth quarter. Analysts were expecting growth of 39.98%, according to Visible Alpha. "This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation," CEO Satya Nadella said. Azure stays in the AI race The Azure performance was the main driver of the stock reaction. Microsoft has been under pressure to show that its AI investments are helping cloud growth. The company has spent heavily on data centres, chips and computing capacity to meet demand from customers using AI tools. The 43% growth in Azure showed that demand remains strong. It also helped calm fears that Google Cloud's recent strong quarter meant Microsoft was losing ground. Also Read: AI Big Short? Why rising credit default swaps are spooking investors and how is it similar to 2008 housing crisis Google Cloud had reported an 82% jump in cloud revenue last week, raising questions about whether it was taking share from rivals. "It seemed kind of like Google was taking market share from everybody and they could catch up to the market share of Azure if they keep on that trajectory," said Dave Wagner, portfolio manager at Aptus Capital Advisors. "But what Azure is showing us is that it's staying right there in the race." Microsoft also reported contracted backlog of $678 billion in its cloud business at the end of the quarter, up from $627 billion in the previous quarter. The company said the entire sequential increase, about $50 billion in future sales, came from commitments by companies outside the leading US AI model makers. Copilot demand beats estimates Microsoft's AI push is also showing up in its productivity business. The company said Microsoft 365 Copilot had more than 30 million paid seats, up from 20 million last quarter. Analysts expected about 26.9 million paid seats, according to Reuters calculations based on estimates from Citi, Morgan Stanley, BNP Paribas and Wells Fargo. Microsoft's Office and productivity software business has long been one of its most reliable sources of profit. There had been concern that AI tools could disrupt this business or take time to generate meaningful revenue. The Copilot numbers suggest customers are paying for AI features inside Microsoft's existing software products.

Microsoft earnings analysis: questions answered and next catalysts By Investing.com

Investing.com -- Microsoft (MSFT) just delivered a FY2026 Q4 beat -- $4.74 EPS (+11.79% surprise) on $90.01B revenue (+$2.4B above estimates) -- and the market rewarded it with a +16.96% surge to $456.76 today, erasing months of frustration where MSFT fell on beats three of the prior four quarters. The real story: Azure crossed $100B in annual revenue at 41% growth, validating the entire AI infrastructure thesis in one number. The Beat That Finally Stuck Every quarter this fiscal year, Microsoft (MSFT) beat estimates -- and got punished for it. Not this time. The difference? Azure growth accelerated to 43% -- above even the elevated 41% expectation -- silencing the "decelerating cloud" narrative that weighed on prior quarters. Questions This Earnings Answered 1. Is Azure growth reaccelerating? Definitively yes. From ~35% in Q3 to 43% in Q4, Azure crossed $100B in annual revenue -- a landmark. AI workloads are no longer a rounding error; they're the growth engine. 2. Is the $41B/quarter CapEx justified? Management's answer: look at RPO. Commercial remaining performance obligation surged 84% to $678B -- that's locked-in future revenue. CapEx is buying capacity that's already sold. Read more 3. Is Copilot actually monetizing? GitHub Copilot hit 50 million users (up from earlier benchmarks), Azure AI Foundry reached 100,000 customers with revenue more than doubling YoY. The "show me the revenue" skeptics got their answer. 4. Can operating margins hold under heavy AI investment? Operating margin held at 45% despite $41B CapEx -- a feat made easier by extending data center depreciation from 15 to 25 years. Structurally smart, if controversial. 5. Is the AI annual run rate still compounding? Yes -- crossing $37B+ annualized AI revenue run rate, up from $13B just over a year ago. The 175% YoY growth rate from FY2025 is compressing but the absolute additions are substantial. Full earnings transcript Questions Still Open 1. Free cash flow quality. Q4 FCF was just $19.6B against $41B CapEx -- well below the $55.4B operating cash flow. Heavy short-lived asset spending (CPUs/GPUs) is the culprit. Bears will watch whether FCF recovers in FY2027 as infrastructure matures. 2. The Maia 200 chip bet. Microsoft's custom AI accelerator offers 30% better performance per dollar and powers OpenAI internally. If it displaces NVIDIA spend at scale, margins improve -- but execution risk is real. Read more 3. More Personal Computing floor. Revenue fell 4% to $12.9B, Xbox down 10%. The PC segment needs Windows 12/AI PC upgrade cycle to inflect -- or it becomes a structural drag. 4. UK CMA regulatory risk. Britain's Competition and Markets Authority opened an investigation into Microsoft's M365 subscription marketing practices on Jul 29. Small now, but EU/UK regulatory patterns can escalate. Read more Next Catalysts The FY2027 Setup Consensus now models $384.9B revenue and $19.46 EPS for FY2027 -- implying ~16% revenue growth and ~13% EPS growth. With RPO at $678B and Azure on a $100B+ annualized run rate, the revenue line looks well-covered. The key variable: whether operating margins expand as CapEx intensity peaks, or whether the AI arms race demands another step-up. Morgan Stanley's $600 price target -- implying ~31% upside from today's $456.76 -- rests on exactly that margin expansion thesis playing out. Read more This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Explained: Why Microsoft shares rallied 9% in extended trading after Q4 earnings despite AI worries

Microsoft shares surged nearly 9% in extended trading after the software giant reported stronger-than-expected Q4 earnings and Azure cloud growth. Robust AI-driven demand, upbeat guidance and lower-than-expected capital expenditure expectations reassured investors that Microsoft's heavy investments in artificial intelligence are beginning to deliver meaningful financial returns. Microsoft shares sharply rallied nearly 9% in extended trading hours on Wednesday after the tech giant's Q4 earnings beat expectations, despite global worries around hyperscalers increasing their already massive AI spending. In post-market hours on Wednesday, Microsoft said it expects to keep generating cash through fiscal 2027 and provided a capital expenditure estimate below Wall Street expectations following an accounting change for data centre leases. US MarketsPowered By As on 30 Jul 2026, 01:30 AM IST S&P 500 Top Gainers Garmin294.83(16.23%) GE HealthCare Techs71.90(12.15%) Cognizant Tech Solns55.97(11.25%) SBA Communications186.29(6.49%) Gainers" S&P 500 Top Losers Lennox Intl430.02(-20.97%) Masco72.56(-11.09%) KLA170.19(-10.80%) Micron Technology739.00(-9.94%) Losers" The company's sales and growth forecast for the ongoing fiscal first quarter also beat expectations, while topping Wall Street estimates for quarterly cloud revenue growth in its fiscal fourth quarter, which ended on June 30, 2026. Microsoft's Azure cloud-computing business reported a 43% rise in revenue in the fiscal fourth quarter, compared with analysts' consensus estimate of 39.98%, according to Visible Alpha, as reported by Reuters. Also read | Microsoft set for $190 billion market value swing after earnings results, options indicate Microsoft's massive AI spending bets finally paying off? Analysts took the earnings metrics as showing that Microsoft's massive AI spending bets were finally paying off, easing investor concerns. The company's CEO Satya Nadella during a conference call with analysts said the tech giant, which once relied on OpenAI for core AI models to power products like its Copilot assistant, is now designing its own models alongside its own chips and reaping efficiency gains of up to 40%. Nadella outlined a vision in which Microsoft and its customers would be free to pick and choose AI technologies based on their cost and performance needs. "That is really the enterprise design architecture ⁠that we are going to evangelize. We ourselves are using it," he said. Microsoft's earnings report follows Google Cloud's blockbuster quarter, with the rival posting an 82% surge in cloud revenue last week, far ahead of market expectations. Capital expenditures rose over 70% YoY to $41 billion during the April-June quarter, but fell slightly short of meeting market sentiment of $42.37 billion. Overall revenue for the quarter rose 18% YoY to $90 billion, beating estimates. Its per-share profit, excluding the impact from investments in OpenAI, was $4.74, beating expectations of $4.24. Also read | Microsoft's AI bet pays off as Azure, Cloud growth beat expectations This comes amid an overall caution around AI spending around the globe, leading to a massive selloff in South Korea's Kospi following a skyrocketing rally earlier this year. (With inputs from agencies) (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

Microsoft's AI bet pays off as Azure, Cloud growth beat expectations - Microsoft Delivers Strong Quarter

Microsoft's AI bet pays off as Azure, Cloud growth beat expectations 1/5 Microsoft Delivers Strong Quarter Microsoft topped Wall Street expectations for its fiscal fourth quarter, driven by robust Azure cloud growth and accelerating AI adoption. Revenue, earnings and guidance all exceeded forecasts, reassuring investors that its massive AI investments are beginning to generate meaningful returns. (Sources: Reuters, Barron's, The Wall Street Journal) 2/5 Azure Outpaces Estimates Azure revenue grew 43% year over year, beating analyst expectations, while Microsoft forecast 45% Azure growth for the current quarter. Strong enterprise demand for AI-powered cloud services helped Microsoft maintain its leadership in the cloud market despite intensifying competition. 3/5 AI Spending Starts Paying Off Despite committing around $175 billion in capital spending for 2026, Microsoft said its AI investments continue to generate healthy cash flows. The company also reported free cash flow above estimates, easing investor concerns over the heavy costs of expanding AI infrastructure. 4/5 Copilot Adoption Accelerates Microsoft said paid Microsoft 365 Copilot users have surpassed 30 million, highlighting growing enterprise adoption of its AI productivity tools. The rapid uptake strengthens confidence that AI software is becoming an important revenue driver alongside cloud services. 5/5 Shares Jump On Optimistic Outlook Microsoft projected first-quarter fiscal 2027 revenue above Wall Street expectations, supported by continued cloud momentum and AI demand. Investors welcomed the upbeat outlook, sending the stock sharply higher in after-hours trading following the earnings release.

Microsoft Beats Cloud Expectations on Azure and the AI Boom

Azure's Q4 revenue rose 43%, versus a 39.98% consensus, allowing Microsoft to top market expectations. The stock rose about 2% following the results. CEO Satya Nadella said Azure's annual revenue surpassed $100bn for the first time, while Microsoft 365 Copilot now has more than 30 million paid licenses. The performance comes as investors question the massive spending on AI infrastructure. Microsoft plans to invest $190bn in 2026, as Big Tech ramps up investment in data centers. The company is also pursuing a diversification strategy by reducing its reliance on OpenAI, including by integrating Anthropic models and developing its own AI technologies. Despite the stock being down 18% YTD, Microsoft is benefiting from sustained demand for its AI services. The company still faces capacity constraints affecting its cloud business, which are expected to persist through to the end of 2026. Several analysts nonetheless argue these concerns are overblown, pointing to investments underway to expand capacity, including through external partnerships such as the deal struck with French company Mistral.

Microsoft tops quarterly cloud growth estimates, easing spending concerns

July 29 (Reuters) - Microsoft topped Wall Street estimates for quarterly cloud revenue growth on Wednesday, a sign its massive spending on AI infrastructure was paying off as capacity constraints ease and more businesses adopt the technology. Revenue at the company's Azure cloud-computing business rose 43% in its fiscal fourth quarter, compared with analysts' consensus estimate of 39.98%, according to Visible Alpha. The strong growth could ease some concerns on Microsoft, which has been under pressure due to surging data center outlays and fears that AI tools could displace its long-reliable productivity software business. It follows Google Cloud's blockbuster quarter, with the rival posting an 82% surge in cloud revenue last week, far ahead of market expectations. Microsoft has forecast spending $190 billion this calendar year, part of the more than $700 billion in unprecedented Big Tech outlays that have strained the companies' cash flows and stoked fears of capacity overbuild. Meanwhile, the company is cutting dependence on OpenAI's technology by adding Anthropic's models into its offerings and developing in-house AI, while leaning on its deep business ties to boost adoption of the $30-a-month Copilot, including through deals such as the one with Accenture earlier this year. The company is among the worst performers in the so-called "Magnificent Seven" group of mega-caps with an 18% drop so far this year, trailing cloud rivals such as Alphabet. Microsoft has said its cloud growth is being held back by capacity constraints that it expects to persist at least through the end of 2026. That has forced the company to choose between powering its own AI services such as the Copilot 365 assistant and renting computing power to customers through Azure. Still, some analysts say the concerns around Microsoft are overblown, noting that AI demand remains strong and it has made efforts to ease constraints through deals beyond its own data-center build-out, such as a recent tie-up with France's Mistral. (Reporting by Deborah Sophia in Bengaluru; Editing by Sriraj Kalluvila)

Microsoft AI cash flow: Microsoft says cash will keep flowing from AI, shares rise

The company also forecast sales and cloud growth that beat expectations for its current fiscal first quarter, after it also topped Wall Street estimates for quarterly cloud revenue growth in its fiscal fourth quarter ended June 30. Microsoft on Wednesday said it expects to keep generating cash through its just-started fiscal 2027 and gave a capital expenditure forecast below Wall Street estimates after an accounting change for data center leases. The company also forecast sales and cloud growth that beat expectations for its current fiscal first quarter, after it also topped Wall Street estimates for quarterly cloud revenue growth in its fiscal fourth quarter ended June 30. All told, the metrics were a sign Microsoft's massive AI spending bets were paying off, easing investor concerns that one of tech's biggest cash generators was spending heavily in pursuit of profits that had yet to materialize. They also appeared to give investors confidence that Microsoft, which is facing a strong challenge from long-time rival Google in its cloud business, can hang ⁠on to ⁠its No. 2 position behind cloud leader Amazon.com. Shares of Redmond, Washington-based Microsoft were up more than 8% in extended trading after its forecast. Revenue at the company's Azure cloud-computing business rose 43% in its fiscal fourth quarter, compared with analysts' consensus estimate of 39.98%, according to Visible Alpha. On conference call with analysts, CEO Satya Nadella said the company, which once relied on ChatGPT creator OpenAI for core AI models to power products such as its Copilot assistant, is now carefully designing its own models alongside its own chips and reaping efficiency gains of up to 40%. Nadella outlined a vision in which Microsoft and its customers would be free to pick and choose AI technologies based on their cost and performance needs. "That's really the enterprise design architecture that we are going to evangelize. We ourselves are using it," Nadella said. Microsoft's report follows Google Cloud's blockbuster quarter, with the rival posting an 82% surge in ⁠cloud revenue last week, far ahead of market expectations. "It seemed kind of like Google was taking market share from everybody and they could catch up to the market share of Azure if they keep on that trajectory," said Dave Wagner, portfolio manager at Aptus Capital Advisors. "But what Azure is showing us is that it's ⁠staying right there in the race." SOLID FORECAST, PERFORMANCE Microsoft forecast a fiscal 2027 first-quarter sales range with a midpoint of $90.4 billion, above estimates of $89.66 billion, according to LSEG data. The company also forecast Azure growth of 45% on a constant currency basis, well above analyst estimates of 40.92%, according to data from Visible Alpha. Microsoft also said it would now spread long-term leases on data centers over 25 years rather than 15, which has the effect of lowering its annual reported capital expenditures. Microsoft said its spending plans remain unchanged and that it expects reported capital expenditures of $50 billion for the fiscal first quarter of 2027 and $175 billion for the 2026 calendar year. The first-quarter forecast was below analyst estimates of $56.02 billion, according to Visible Alpha data, and the calendar 2026 estimate was below Microsoft's own previous estimate of $190 billion. Microsoft's spending is part of $700 billion in unprecedented Big Tech outlays that have strained the companies' cash flows and stoked fears of capacity overbuild. Microsoft's free cash flow for the fiscal 2026 fourth quarter was $19.6 billion, above analyst estimates of $13.44 billion, according to Visible Alpha data, but down 23% from the previous year. Capital expenditures for the April-June quarter were $41 billion, up more than 70% from last year, and compared with market estimates of $42.37 billion. Microsoft reported $31.9 billion in capital spending in the prior three-month period. But much more ⁠spending could be coming. In a securities filing, Microsoft said it has data center leases of $329.1 billion that have not yet commenced, with leases starting between its fiscal year 2027 and fiscal year 2033. Microsoft said some of the leases are subject to certain contractual conditions being met before they begin. Microsoft reported contracted backlog of $678 billion in its cloud business at the end of the quarter, up from $627 billion in the prior quarter. It said all the sequential gains, or about $50 billion in future sales, were driven by commitments from companies outside the leading U.S. AI model makers. Its M365 Copilot paid seats totaled more than 30 million, compared with 20 million reported last quarter. Analysts on average were expecting 26.9 million Copilot seats, according to Reuters calculations based on estimates from Citi, Morgan Stanley, BNP Paribas and Wells Fargo. The company is among the worst performers in the so-called "Magnificent Seven" group of mega-caps with an 18% drop so far this year, trailing cloud rivals such as Alphabet. Overall revenue for the quarter rose 18% to $90 billion, beating estimates. Its per-share profit, excluding the impact from investments in OpenAI, was $4.74, beating expectations of $4.24.

Microsoft earnings surprise: Azure outperforms, Copilot adoption hits new record

Satya Nadella said Microsoft's in-house AI models and chips have improved efficiency by up to 40%, with cloud backlog reaching $678 billion. Microsoft has reported stronger-than-expected quarter results thanks to its cloud and artificial intelligence businesses. The company has also issued an optimistic outlook for the current quarter, easing investor concerns over its massive AI investments and sending its shares sharply higher in after-hours trading. For the quarter ended June 30, Azure revenue grew 43 per cent year-on-year, comfortably ahead of analysts' expectations of around 40 per cent. Overall revenue reached $90 billion, while earnings per share also surpassed Wall Street estimates. The company's guidance for the current quarter further impressed the investors. Microsoft projected revenue above market forecasts and expects Azure to continue growing at a strong pace. It also revised how it accounts for long-term data centre leases, spreading lease costs over 25 years instead of 15. While this reduces reported annual capital expenditure, Microsoft said its overall investment strategy remains unchanged. Also read: Monsoon AC tips: 5 common mistakes that can raise your electricity bill "This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation. We delivered a strong quarter to close out the fiscal year, highlighted by Microsoft Cloud revenue of $59.3 billion, up 27% year-over-year," said Amy Hood, executive vice president and chief financial officer of Microsoft. CEO Satya Nadella said Microsoft's AI strategy is becoming increasingly independent, with the company developing its own AI models and custom chips alongside existing partnerships. According to him, these efforts have improved efficiency by as much as 40 percent, while giving customers greater flexibility to choose AI models based on performance and cost. The company has also talked about the growing adoption of AI products. As per the brand, over 30 million paid for the Microsoft 365 Copilot, up from 20 million in the previous quarter. Microsoft disclosed that its cloud business backlog has grown to $678 billion. It also revealed future data centre lease commitments worth more than $329 billion that are expected to begin between fiscal years 2027 and 2033.