Microsoft's Azure Cloud Revenue Surges, Fueled by AI Investments

Microsoft's Quarterly Cloud Sales, Profit Exceed Expectations

Microsoft Corp. reported better-than-expected growth in its cloud business, which it says brought in more than $75 billion in the past year, as the company continues to commercialize artificial intelligence services. The closely watched Azure cloud-computing unit posted a 39% rise in sales during Microsoft's fiscal fourth quarter, the company said in a statement on Wednesday. Analysts projected 34% revenue growth. The company said sales at the cloud division grew 34% to more than $75 billion during the year ended in June, the first time the company has disclosed a revenue figure for Azure, which sells computing power and other services to businesses. Overall, sales rose 18% to $76.4 billion during the quarter. Net income was $3.65 a share. Greg Halter, director of research at Carnegie Investment Counsel, and Bloomberg Intelligence's Anurag Rana react to the earnings. (Source: Bloomberg)

Microsoft's Azure cloud revenue surges as AI spending pays off

July 30 (Reuters) - Microsoft's (MSFT.O), opens new tab Azure cloud-computing business delivered another quarter of blockbuster growth on Wednesday, powering revenue above Wall Street's expectations and showcasing the growing returns on its massive artificial intelligence bets. Shares of the software company rose more than 6% in extended trading after it said Azure sales surpassed $75 billion on an annual basis, the first time it has disclosed that figure. That beat expectations for $74.62 billion. The business still trails market leader Amazon Web Services (AMZN.O), opens new tab, which had an earlier start in cloud computing and brought in $107.56 billion in its most recent fiscal year. The results are likely to bolster investor confidence that Big Tech is benefiting from its massive data center buildout, with capital expenditure to reach $330 billion this year. Rival Alphabet's (GOOGL.O), opens new tab earnings also showed last week that AI spending was rising, but so were the returns, as it beat revenue estimates and lifted its outlay forecast by $10 billion. Microsoft said Azure revenue jumped 39% in the June quarter, more than the analyst average estimate of 34.75%, according to Visible Alpha. Overall revenue rose 18% to $76.4 billion in the April-June period, Microsoft's fiscal fourth quarter. Analysts on average expected $73.81 billion, according to data compiled by LSEG. Capital spending rose 27% to $24.2 billion, compared with estimates of $23.08 billion, per Visible Alpha. Microsoft has said the spending is crucial to overcoming supply constraints that have hampered its ability to meet soaring AI demand. The company has emerged as an early leader in making money from AI thanks to its exclusive access to OpenAI's technology. The tie-up has helped attract scores of businesses to its cloud service and allowed Microsoft to swiftly roll out AI products such as its M365 Copilot AI assistant for enterprises. It has also turned the company into an investor darling that is $200 billion short of becoming only the second company to hit a $4-trillion valuation, with its shares up about 20% this year. But investor doubts have risen about the OpenAI tie-up as the companies renegotiate the deal and the startup shifts some workloads to rivals, including Google and Oracle . Media reports have said that the two are at a deadlock over how much access Microsoft will retain to OpenAI's tech and its stake if OpenAI converts into a public-benefit corporation. Microsoft has tried to reduce its reliance on OpenAI by developing in-house AI technology and broadening its model lineup with partners such as xAI, Meta (META.O), opens new tab, and France's Mistral, hosting their models on Azure for clients. Reporting by Deborah Sophia and Aditya Soni in Bengaluru; Editing by Anil D'Silva and Rod Nickel Our Standards: The Thomson Reuters Trust Principles., opens new tab

Microsoft tops quarterly revenue estimates on strong Azure demand

July 30 (Reuters) - Microsoft (MSFT.O), opens new tab surpassed Wall Street estimates for quarterly revenue on Wednesday as strong demand from businesses for artificial intelligence tools drove steady growth in its Azure cloud-computing unit. Total revenue rose 18% to $76.4 billion in the April-June period, the company's fiscal fourth quarter. Analysts on average expected $73.81 billion, according to data compiled by LSEG. Azure revenue rose 39%, compared with Visible Alpha estimates of 34.75%. Shares of the company jumped more than 6% in extended trading. Microsoft, the No. 2 cloud provider, said its Azure unit surpassed $75 billion in full-year revenue, disclosing Azure sales in dollars for the first time. That compares with Visible Alpha estimates of $74.62 billion, and cloud leader Amazon Web Services' 2024 revenue of $107.56 billion. Big Tech is under pressure to deliver stronger returns on the hundreds of billions of dollars it has poured into artificial intelligence, with analysts estimating more than $330 billion will be spent this year, largely on data centers. Microsoft shares have gained more than 21% in 2025 on optimism that demand for Azure - crucial for running AI workloads, especially OpenAI's technology - will remain strong. The company has also pushed agentic AI, tech capable of handling routine tasks without human intervention, by launching a clutch of autonomous agents, including one for GitHub Copilot. Last week, Alphabet's (GOOGL.O), opens new tab Google Cloud beat revenue estimates and lifted full-year capex by $10 billion to $85 billion to support surging demand for its cloud services. But it joined cloud rivals, including Microsoft, in warning that capacity constraints, driven by the limited supply of AI chips, were hampering its ability to capitalize on the demand. Microsoft's lucrative tie-up with OpenAI that gives it exclusive access to the ChatGPT maker's technology is also under scrutiny as the startup shifts some workloads to rivals, including Google and Oracle (ORCL.N), opens new tab. Microsoft has tried to reduce its reliance on OpenAI by broadening its model lineup with partners such as xAI, Meta (META.O), opens new tab, and France's Mistral, hosting their models on Azure for clients. It also rolled out new features to Copilot in April in a bid to boost adoption, and has moved to shore up the core, non-AI side of Azure after a slowdown earlier this year. Reporting by Deborah Sophia in Bengaluru; Editing by Anil D'Silva Our Standards: The Thomson Reuters Trust Principles., opens new tab

Microsoft to spend record $30 billion this quarter as AI investments pay off

July 30 (Reuters) - Microsoft (MSFT.O), opens new tab forecast on Wednesday a record $30 billion in capital spending for the current fiscal first quarter, after booming sales in its Azure cloud computing business showcased the growing returns on its massive bets on artificial intelligence. Shares of the software company rose 9% in extended trading after it said Azure sales surpassed $75 billion on an annual basis, the first time it has disclosed that figure, beating expectations for $74.62 billion. Microsoft's higher-than-expected capital expenditure forecast - its largest ever for a single quarter - put it on track to potentially outspend its rivals over the next year. It came after Google said it would spend more on data centers to meet demand for AI services, and Meta projected higher sales with only modest increases in spending. The trio of results could help resolve investor questions about whether Big Tech is benefiting from its massive data center buildout, with capital spending to reach $330 billion this year. Microsoft and Meta's results helped fuel a $500-billion gain in AI stocks. "I feel very good that the spend that we're making is correlated to basically contracted, on-the-books business that we need to deliver," Microsoft Chief Financial Officer Amy Hood said on a conference call with investors. Microsoft's cloud business still trails market leader Amazon Web Services (AMZN.O), opens new tab, which had a head start in cloud computing and brought in $107.56 billion in its most recent fiscal year. But investors said Microsoft's new revenue figure indicates its investments are translating to increased sales. "Now that Microsoft's disclosing that number, it's really just helping justify the huge investments," said Dave Wagner, portfolio manager at Aptus Capital Advisors, which holds Microsoft shares. Rival Alphabet's (GOOGL.O), opens new tab earnings also showed last week that AI spending was rising, but so were the returns, as it beat revenue estimates and lifted its outlay forecast by $10 billion. Microsoft said Azure revenue jumped 39% in the June quarter, more than the average analyst estimate of 34.75%, according to Visible Alpha. The company said it expects growth of 37% for the current quarter, beating analyst estimates of 33.5%, according to Visible Alpha data. Microsoft has said the spending is crucial to overcoming supply constraints that have hampered its ability to meet soaring AI demand. The fiscal first-quarter capital expenditure estimate of $30 billion surpassed analysts' expectations of $23.75 billion, according to Visible Alpha data. In the just-ended fiscal fourth quarter, capital spending rose 27% to $24.2 billion, compared with estimates of $23.08 billion, per Visible Alpha. Microsoft said its Copilot AI tools had surpassed 100 million monthly active users, the first time it has provided such a figure. Google has said rival Gemini has 450 million active users. Overall revenue rose 18% to $76.4 billion in the April-June period, Microsoft's fiscal fourth quarter. Analysts on average expected $73.81 billion, according to data compiled by LSEG. LONGER-LIVED ASSETS Microsoft said its capital spending trended slightly toward longer-lived assets such as data centers, after it previously told investors the mix would shift toward shorter-lived assets such as chips over its 2026 fiscal year. Jonathan Neilson, Microsoft's vice president of investor relations, said that guidance does not mean that Microsoft will not continue to invest in longer-lived assets when capacity is needed to meet demand. "We are going to absolutely invest against that," Neilson said in an interview. The company has emerged as an early leader in making money from AI thanks to its exclusive access to OpenAI's technology. The tie-up has helped attract scores of businesses to its cloud service and allowed Microsoft to swiftly roll out AI products such as its M365 Copilot AI assistant for enterprises. "The bar was set really high. And my impression is they delivered ... They were able to execute in a very demanding environment," said Dan Morgan, portfolio manager at Synovus Trust, which owns Microsoft shares. Microsoft is just $200 billion short of becoming only the second company to hit a $4-trillion valuation, with its shares up about 20% this year. But investor doubts have risen about the OpenAI tie-up as the companies renegotiate the deal and the startup shifts some workloads to rivals, including Google and Oracle . Media reports have said the two are at a deadlock over how much access Microsoft will retain to OpenAI's tech and its stake if OpenAI converts into a public-benefit corporation. Microsoft has tried to reduce its reliance on OpenAI by developing in-house AI technology and broadening its model lineup with partners such as xAI, Meta (META.O), opens new tab, and France's Mistral, hosting their models on Azure for clients. Reporting by Deborah Sophia and Aditya Soni in Bengaluru; Editing by Anil D'Silva and Rod Nickel Our Standards: The Thomson Reuters Trust Principles., opens new tab

Cloud wars: How Microsoft stacks up against Amazon, Google, Oracle in 1 chart

A busy week of tech earnings addressed a long-simmering question for investors: The scale of Microsoft's Azure in the cloud wars versus market leader and pioneer Amazon Web Services. The answer is that Amazon's AWS still rakes in quite a bit more money, but Azure gained ground over the past year thanks to its artificial intelligence prowess and partnership with ChatGPT creator OpenAI. Among the domestic cloud providers, Alphabet's Google Cloud is the third biggest by revenue. Oracle is in a distant fourth place, though it's growing the fastest and has played up its AI computing chops. The chart shows how all four stack up. One data note: Oracle uses a slightly different fiscal calendar, with its latest reported quarter ending in May (versus June for the other three). The Oracle cloud revenue figure is based on the company's infrastructure-as-a-service line item. This comparison was made possible by Microsoft's disclosure Wednesday night that Azure's revenue surpassed $75 billion in its fiscal year 2025, the first time the company provided a look at the cloud unit's size in dollar terms. Microsoft said Azure's revenue grew 34% on an annual basis in that 12-month period ended in June. This suggests Azure revenue in the prior fiscal year was roughly $56 billion. Investors covet additional information to evaluate a company's financial performance, especially in the case of Azure, a vital part of the Microsoft investment story. While still waiting on an exact Azure sales number -- or, better yet, an operating income figure -- Wednesday's update is an improvement over Microsoft's standard reporting procedure of providing only Azure's topline growth rate each quarter. Investors have previously relied on market-share estimates from industry research firms to understand how Azure measured up versus AWS. "We continue to lead the AI infrastructure wave and took share every quarter this year," Microsoft chief Satya Nadella said on the earnings call. "We opened new [data centers] across six continents and now have over 400 data centers across 70 regions, more than any other cloud provider." Nevertheless, AWS -- the first modern cloud service, launched in 2006, four years before Azure's commercial debut -- is still the revenue king. In the 12 months ended in June, AWS brought in $116.39 billion -- a sum that includes the $30.87 billion in second-quarter revenue that the company reported Thursday night. That's up 18% from $98.58 billion in the 12-month period ending in June 2024. Amazon's cloud revenue lead over Microsoft is shrinking, though. Here's the rough math, using $75 billion as Azure's revenue number. Technically, Microsoft said revenue "surpassed" that amount, but without knowing the exact figure, we'll use a flat $75 billion as our input. In Microsoft's fiscal 2024, Azure's revenue was about 57% that of AWS, at roughly $56 billion versus $98.58 billion. In fiscal 2025, it swelled to more than 64% of AWS revenue. To be sure, with the Club having a position in both companies, Azure's recent acceleration is encouraging -- and at the same time, concerns about the slowdown in AWS's growth rate are overblown. "Azure is not going to catch them," Jim Cramer said Friday morning, noting the boost that OpenAI provides to Azure. OpenAI's contribution to Azure is a bit of a moving target going forward as the ChatGPT creator looks for more independence from Microsoft , a major investor and previously its exclusive computing provider. For example, OpenAI recently struck up a computing relationship with Oracle. On Amazon's earnings call Thursday night, CEO Andy Jassy went on the offensive when asked about the competitive dynamics in cloud computing. "When we look at the results over the last number of quarters, there are sometimes where, as far as we can tell, we're growing faster than others and sometimes others are growing faster than us," said Jassy, who used to run AWS before leading the whole firm. " But it's still, if you look at second-place player you're talking about, it's still a pretty significant ... market-segment leadership position that we have. And regardless, these are all really just moments in time. The last week is a moment in time too, where the reality of what really matters is what customers' experiences are in operating on these platforms. And if you look at what matters to customers, what they care - they care a lot about what the operational performance is, what the availability is, what the durability is, what the latency and throughput is of the various services. And I think we have a pretty significant advantage in that area. They care a lot about security, if you have data that matters and for most companies, they're putting data that they really care about in the cloud. The security and the privacy of that data matters a lot, and there are very different results in security in AWS than you'll see in other players." For its part, Azure's revenue scale versus Google Cloud held relatively constant in the same periods. Google Cloud's revenue has been about two-thirds as much as Azure in both Microsoft's fiscal 2024 and 2025. Google Cloud gained a little bit of ground on AWS in the 12 months ended in June, coming in at about 42% of its revenue versus 38% in the prior comparison window. (Jim Cramer's Charitable Trust is long AMZN and MSFT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Microsoft's annual cloud revenue hits $75B, profit beats expectations

REDMOND, Wash. (AP) -- Microsoft said Wednesday that annual revenue for its flagship cloud computing platform rose 34% to $75 billion. The Azure cloud business has been a centerpiece of Microsoft's efforts to shift its focus to artificial intelligence. The software giant said its fiscal fourth-quarter profit was $34.3 billion, or $3.65 per share, beating analyst expectations for $3.37 per share. It posted revenue of $76.4 billion in the April-June period, up 18% from last year. Analysts polled by FactSet Research had been looking for revenue of $73.86 billion. Microsoft has announced layoffs of about 15,000 workers this year even as its profits have soared. Microsoft CEO Satya Nadella told employees last week the layoffs were "weighing heavily" on him but also positioned them as an opportunity to reimagine the company's mission for an AI era. Promises of a leaner approach have been welcomed on Wall Street, especially as Microsoft and other tech giants are trying to justify huge amounts of capital spending to pay for the data centers, chips and other components required to power AI technology. Google said after releasing its earnings last week it would raise its budget for capital expenditures by an additional $10 billion to $85 billion. Microsoft is expected to outline similar guidance soon.

Microsoft's monster quarter and strong outlook cements its status as an AI leader

Microsoft shares surged in extended trading on Wednesday after the tech giant reported strong quarterly results, fueled by an acceleration in cloud-computing revenue growth. An upbeat forecast for the current period solidified the stock's advance. Revenue increased 18% year over year to $76.4 billion in its fiscal 2025 fourth quarter, beating the Street consensus estimate of $73.8 billion, according to data from LSEG. Earnings per share increased 24% from last year to $3.65, ahead of EPS estimates of $3.37, LSEG data showed. With shares up more than 8% in extended trading Wednesday, Microsoft is on track to join fellow Club name Nvidia in the exclusive $4 trillion market cap club. MSFT YTD mountain Microsoft's year-to-date stock performance. Bottom line If there was any doubt about Microsoft's leadership in artificial intelligence, this quarter put it to rest. Revenue growth at cloud computing unit Azure accelerated for the second quarter in a row and materially exceeded Wall Street's consensus forecast. We also gained more clarity on the scale of the business, as CEO Satya Nadella revealed in the earnings release that Azure generated over $75 billion in revenue during Microsoft's fiscal year 2025, marking a 34% year-over-year increase. Throughout the earnings call, management emphasized that cloud demand is outpacing supply -- a positive sign for future growth. Microsoft's revenue guidance for the three months ending in September -- the first quarter of fiscal 2026 -- was also better than expected. Additionally, capital expenditures are projected to be higher than anticipated, supporting the broader AI infrastructure thesis. In general, Club names such as Nvidia, GE Vernova and Eaton all benefit from the billions of dollars that tech giants are spending to build new centers. There's so much to like in this Microsoft quarter that the stock move in after-hours trading is understandable. Nevertheless, it is an impressive reaction considering the stock has been nearly straight up since its last earnings release in April and closed Wednesday's session essentially at an all-time high. This created a high bar into earnings, one that Google parent Alphabet could barely get over last week despite its solid results. But these numbers are a whole lot better than Alphabet's, making Microsoft an exception to the "lackluster reaction to earnings theme" we've seen the last few weeks. By the way, fellow Club name Meta Platforms is also an exception after its dynamite quarter reported Wednesday night. Also, Microsoft's cloud results and Meta's advertising revenue growth are positive signs for Amazon's cloud and advertising segments ahead of its earnings report Thursday evening. How online sales fared amid a cautious consumer will be the swing factor in that report. We are increasing our Microsoft price target to $600 a share off the better-than-expected quarter, guidance, and continuation of strong AI spending. We reiterate our 2 rating, meaning look to buy on pullbacks. Quarterly commentary Productivity and business processes reported the largest upside to revenue estimates by dollar amount and better-than-expected operating income. Operating margins also improved by about 250 basis points, equal to 2.5 percentage points. Microsoft 365 commercial cloud revenue increased 18% year over year, with growth in revenue per user driven by M365 Copilot and E5. Seats increased by 6% year over year. The company said its family of Copilot applications exceeded 100 million monthly active users across commercial and consumer, although it's unclear how many of those are paid users. Microsoft 365 consumer cloud revenue growth increased 20% year over year, with subscribers increasing to 89 million from 87.7 million one quarter ago. LinkedIn revenue was up 9% and all business lines grew sales. Dynamics 365 revenue increased 23% year over year, driven by growth across all workloads. Intelligent cloud reported a strong revenue beat of nearly $1 billion, although operating income missed expectations by about $340 million and the operating margin contracted by about 70 basis points versus last year. Azure. Wow. Revenue growth from Azure and other cloud services accelerated to 39%, smashing the analyst consensus estimate of a 34.4% increase on a constant currency basis and management's prior guidance of a 34% to 35% increase. The constant currency result gives a clearer picture because it strips out the effects of fluctuating foreign exchange rates. Azure's results were also better than what more bullish investors anticipated, also referred to as the buy-side expectations. On the call, Nadella and CFO Amy Hood hyped up how they believe they are the leaders in AI infrastructure and took share every quarter in its fiscal year. They also touted their data center presence, with over 100 data centers across 70 countries. According to Nadella, that's more than any other cloud provider. But it still sounds like these data centers can't get built fast enough. Hood said demand is still higher than supply. Executives also offered up three reasons why Azure has been significantly better than expected for two quarters in a row: 1) ongoing migrations from on-premise servers to the cloud; 2) the scaling of cloud-native applications; and 3) new AI workloads. The more personal computing segment reported a 9% increase in revenue, beating estimates. Operating income was up significantly from last year but fell about $237 million short of estimates. All the main businesses reported annual increases in revenue, with Windows OEM and Devices up 3%; Xbox content and services up 13%; and Search and news advertising (ex-traffic acquisition costs) up 21%. The Bing search business is also a higher-margin product, helping the broader segment expand its operating margins by 436 basis points versus last year. Guidance The revenue outlook for the first quarter of fiscal year 2026 was better than expected. At the midpoint of each segment's outlook, management expects revenue to total $75.25 billion, beating the consensus forecast of $74.18 billion. The largest source of revenue upside was in the productivity and business process segment, but the intelligent cloud unit also was a beat. In the latter, Microsoft expects Azure revenue growth to be approximately 37% in constant currency. That's a slight deceleration from the reported quarter, but still well above the consensus estimate of 33.7%. Microsoft anticipates being computing capacity constrained through the first half of the fiscal year. On capex, management expects to invest over $30 billion in the first quarter -- a big step up from the $20 billion spent in the first quarter of fiscal 2025. The rapid pace of spending used to draw the ire of the market, but Microsoft wouldn't be investing so much if it didn't have visibility into demand to back it up. Microsoft ended the quarter with a "commercial remaining performance obligation," or backlog, of $368 billion. About 35% of this will be recognized in revenue in the next 12 months. This backlog and the recent surge in Azure revenue growth over the past two quarters add credibility to management's capex strategy. For the full fiscal year, the company provided high-level guidance of double-digit revenue and operating income growth alongside relatively unchanged operating margins. The company did not provide a capex estimate for the full fiscal year, but if it spends $30 billion in every quarter then the full-year amount would be $120 billion, significantly above the FactSet consensus estimate of $90.7 billion. (Jim Cramer's Charitable Trust is long MSFT, NVDA, GEV, ETN, META and AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Microsoft is surging following its earnings beat. Here's what analysts are saying

Analysts and investors liked what they just heard from Microsoft . For the company's fiscal fourth quarter , Microsoft earned $3.65 per share on $76.44 billion in revenue. That's better than the $3.37 per share and $73.81 billion in revenue that analysts surveyed by LSEG were looking for. Azure's revenue growth was a standout figure of the report, as it rose 39% during the quarter. Analysts polled by StreetAccount had expected growth of 34.4%. Looking ahead, Microsoft said it anticipates Azure growing 37%, better than the StreetAccount consensus estimate of 33.7%. Investors were encouraged by the report, as Microsoft shares surged in extended trading Wednesday. Shares were last up more than 8% in the premarket, putting the company on track to reach a market capitalization above $4 trillion . MSFT 1D mountain MSFT, 1-day Several analysts reaffirmed or adopted a bullish view on the stock, including KeyBanc analyst Jackson Ader, who upgraded the stock to overweight from sector weight. "Azure growth solves all problems," wrote Ader in a note dated Wednesday. "The last two quarters have rendered the debates all but irrelevant for the time being. The Azure segment produced roughly $500M and $700M of upside to guidance in the last two quarters, respectively, the equivalent of finding a Monday.com in your couch cushions." "Upside like this is why we do not expect the costs of supporting the Azure business to be debated much for the remainder of the year," he continued. Here is where analysts from key firms stood after Microsoft's earnings. KeyBanc upgrades Microsoft to overweight, re-establishes $630 price target KeyBanc's target implies upside of 23%. "There was no material mention of macro headwinds on the call and, since the time of our fears over needing to cut operating expenses in order to defend margins, Microsoft has laid off over 10,000 employees. We said last quarter we may not have the stomach for many more quarters of major upside while Sector Weight, now we don't have the stomach or the thesis for it." Bank of America maintains buy and top pick rating and raises target to $640 from $585 Analyst Brad Sills' target reflects almost 25% upside. "Microsoft reported another robust quarter, with broad strength across the two key growth franchises, Azure and Office. ... It does not appear that the quarter benefitted from a material improvement in the channel business. In other words, continued improvement there could represent a source of potential upside going forward. ... Q4 results validate our view that Microsoft is an AI beneficiary in both applications and infrastructure. Given the size of the AI software market ($155bn by our estimate), this sets up Microsoft for durable mid/high teens topline growth for years to come." Goldman Sachs reiterates buy rating and lifts target to $630 from $550 Analyst Kash Rangan's target implies almost 23% upside. "We leave with increasing confidence in the longevity of AI-supported growth supporting share capture across Microsoft's businesses. This quarter helped validate our thesis that AI percolates up the stack, the ripple effect of Microsoft's GPU compute leadership drives demand for their wider suite of higher-margin products which, uniquely, cover all layers of the tech stack. We believe that in an agentic world, as AI workloads rapidly scale, Microsoft will see benefits across its business, with demand for more storage, more databases, and more application usage (as well as upside from OpenAI revenue sharing)." Morgan Stanley maintains its overweight rating and ups target to $582 from $530 Analyst Keith Weiss' target calls for more than 13% upside. "While Microsoft clearly illustrated its strong positioning for the key secular growth trends now being seen in software, the core investor question now turns to the durability of that growth. Our view: the solid earnings growth at Microsoft likely proves more durable than investors estimate, a couple of broad points bolstering our optimism." Wells Fargo raises price target to $650 from $600, keeps overweight rating Analyst Michael Turrin's forecast signals a gain of 26%. "In addition to a 4-pt beat driving 4Q growth to 39% cc, the next qtr guide of 37% cc (vs our prior 34%) is a strong starting place for '26. Call commentary pointed to acceleration in core workloads behind large customer strength, migration activity (noted SAP workloads), cloud-native scaling, and AI halo effects (AI driving usage of core). AI contrib. metric was discont'd (as expected), reorienting investors towards total Azure as AI vs non-AI becomes harder to bifurcate." Wolfe Research keeps it outperform rating and hikes target to $675 from $650 Analyst Alex Zukin's target sees more than 31% upside. "Hopes, positioning ( & bogeys) were sky-high this quarter for MSFT to keep the GenAI dream alive with shares trading +22% into the print. But what MSFT delivered was not just 'Olympic' but rather HISTORIC with not just the largest ever Azure 'beat' (450 bps +39% growth for a $75B run rate business) but actually its largest beats across ALL segments as the platform story went 'Flame On'. ... We believe confidence in demand and supply improvements support potential FY26 Azure growth acceleration & we leave the call with even more conviction in the durability of top & bottom line durable mid-teens growth. Given increased scarcity of scaled & durable mid-teens growth, the stage is set for a more premium valuation to match the most premium execution in software." Evercore ISI gives outperform rating and increases target to $625 from $545 Analyst Kirk Materne's target reflects nearly 22% upside. "It was a bit of a 'mic drop' quarter for Azure which at 39% y/y growth blew past Street estimates of 34 35% and even 'whisper numbers' in the 35%-36% range. While the AI contribution to Azure was in line with expectations, the results illustrate that there is a growing AI 'halo' for MSFT's broader suite of cloud services and this is not only showing up in the Azure results, but also in overall commercial bookings which were up 30% y/y, and Commercial RPO of $368bn (+35%). ... While shares have had a massive run over the last few months, we continue to believe there are few companies better positioned to monetize AI adoption in the enterprise and MSFT remains in an enviable position in terms of being able to deliver durable top-and-bottom-line growth at massive scale."

Microsoft Backs Up A.I. Spending With $27.2 Billion Quarterly Profit

Microsoft poured $88 billion into building data centers for artificial intelligence and cloud computing over the past year, and financial results it released on Wednesday show the investments are starting to pay off. Sales topped $76.4 billion from April through June, up 18 percent from the same period a year earlier, according to the quarterly results. Profit rose to $27.2 billion, up 24 percent. The results surpassed Wall Street's expectations, and Microsoft's share price was up more than 6 percent in aftermarket trading. Microsoft's aggressive moves to pursue A.I., most critically through its partnership with the start-up OpenAI, has produced a revival of Azure, its flagship cloud computing services. The company for the first time released revenue for Azure, sharing that it topped $75 billion in the past year. Two years ago, Azure and other cloud services were growing 26 percent in the same quarter. Now, even though Azure has become a much larger business, it grew 39 percent. "Cloud and A.I. is the driving force of business transformation across every industry and sector," Satya Nadella, Microsoft's chief executive, said in a statement. The company has been racing to get enough data centers in operation. It has been telling investors for the past several quarters that it has more demand for its services than data centers to deliver cloud computing and A.I. services. (The New York Times has sued OpenAI and Microsoft, claiming copyright infringement of news content related to A.I. systems. The two companies have denied the suit's claims.) Commercial sales for Microsoft's online productivity tools for businesses, including Excel, Teams and Word, grew 18 percent. The figure also includes sales of its corporate A.I. assistant called Copilot. Microsoft's personal computing business had $13.5 billion in sales. That included 3 percent growth in the sales of Windows installed on new personal computers. Part of the growth is thanks to the surprising resilience of laptop sales. Earlier this year, manufacturers had been rushing to make more PCs before tariffs took effect, which some analysts thought would result in a short-term surge in sales. But the global PC market has remained strong. Personal computer shipments to the United States were flat from April through June, reflecting a decline in demand over tariffs, though elsewhere in the world sales grew 9 percent, according to the research firm IDC. Microsoft ended its fiscal year with 228,000 employees, the same as a year ago. The company laid off 6,000 people in May, and another 9,000 this month. In a note to employees last week, Mr. Nadella said he understood the frustration over the layoffs despite the fact that "by every objective measure, Microsoft is thriving." He called the contradiction, "the enigma of success."

Microsoft's Azure revenue tops $75 billion as AI demand accelerates

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. What just happened? Microsoft's Azure division has disclosed that it generated over $75 billion in revenue during its 2025 fiscal year, a milestone that offers fresh insight into the scale and momentum of the company's core cloud business. The figure represents an annual growth rate of 34 percent for Azure, underscoring how Microsoft's continued investment in cloud and artificial intelligence infrastructure is accelerating its transformation into a formidable challenger in the highly competitive cloud market. Azure's performance places Microsoft firmly behind Amazon Web Services, which remains the global leader in cloud infrastructure with annual revenue exceeding $111 billion. However, Azure's growth rate outpaces that of several top competitors, reinforcing Microsoft's position as a serious rival and highlighting its increased focus on enterprise-centric AI and cloud solutions. The surge in Azure's revenue has been largely driven by global demand for artificial intelligence services. Microsoft's partnership with OpenAI has been pivotal in expanding its enterprise offerings, integrating large language models and AI agents across its platform. AI-powered products such as Microsoft 365 Copilot and custom Azure OpenAI services are seeing rapid adoption by organizations. Azure's integration with OpenAI's models allows developers to deploy scalable AI applications across industries including healthcare, finance, customer support, and software development. The platform supports both REST API and container-based model deployments. This rapid expansion comes amid record capital expenditures by Microsoft, which invested $24.2 billion in the fourth fiscal quarter - up 27 percent year-over-year - and is projecting a massive $30 billion in capital spending for the current quarter alone. A significant portion of this investment is directed toward building long-term assets such as data centers, designed to meet the persistent demand for cloud and AI services. More than half of the outlay supports assets expected to generate revenue over a 15-year horizon, reflecting Microsoft's confidence in sustained AI-driven growth. While Azure remains closely tied to developments at OpenAI, Microsoft is actively diversifying its AI portfolio. The company is investing in proprietary AI research and expanding Azure's model offerings to include those from other partners such as xAI, Meta, and Mistral. This strategic diversification aims to mitigate risks associated with its reliance on OpenAI, whose long-term relationship with Microsoft remains the subject of ongoing industry speculation.

Microsoft earnings preview: AI fuels cloud growth, boosts capital costs, reshapes workforce

Microsoft is expected to report continued strength in its cloud business Wednesday, powered by growing corporate demand for artificial intelligence, as the human and financial toll of its rapid AI transformation becomes more clear. Wall Street expects revenue of $73.83 billion and earnings of $3.38 per share for the fourth quarter of Microsoft's 2025 fiscal year, according to Yahoo Finance, representing earnings growth of more than 14% from a year earlier. The report comes as Microsoft boosts capital spending to expand its AI infrastructure, increasing revenue through offerings such as Azure OpenAI Services and GitHub Copilot. But that spending is also creating pressure to rein in operating expenses -- the backdrop for its recent layoffs of more than 15,000 employees. Microsoft's broad investments in AI "should support share gains and durable growth ahead," wrote Morgan Stanley analysts Keith Weiss and Josh Baer in a July 22 research note. They cited "strong opex discipline" as another factor. In the third quarter, revenue from AI services contributed 16 percentage points of growth to the overall 33% growth in Microsoft's Azure business -- the highest to date -- illustrating the central role of artificial intelligence in driving the company's cloud momentum. A key factor is corporate demand for OpenAI's technology, under Microsoft's partnership with the ChatGPT maker. Bloomberg News reported Tuesday that Microsoft and OpenAI are in talks over new deal terms that would give Microsoft longer-term access to OpenAI's technology while helping OpenAI convert to a for-profit entity. Microsoft Cloud revenue, which includes Azure, Microsoft 365, Dynamics 365, and LinkedIn commercial services, reached $42.4 billion in the third quarter, up 20% from a year earlier -- reflecting strong demand for its enterprise software and cloud infrastructure services. At the same time, Microsoft's capital expenditures reached $21.4 billion in the third quarter, part of an estimated $80 billion in annual infrastructure spending. As a result, Microsoft said gross margins in its cloud business declined to 69%, down from 72% the year before, reflecting the cost of building and expanding its data centers to accommodate growing AI workloads, and developing and acquiring AI-optimized chips. Microsoft President Brad Smith, in a recent press conference and interview with GeekWire, said internal AI efficiency gains were "not a predominant factor" in the company's layoffs, instead citing shifting priorities and the need to reallocate resources. However, he acknowledged that rising capital expenditures have created pressure to reduce operating costs, which consist largely of employee headcount. In a memo to employees last week, Microsoft CEO Satya Nadella acknowledged the "uncertainty and seeming incongruence" of thriving financially while undergoing major layoffs. "This is the enigma of success in an industry that has no franchise value," he wrote. "Progress isn't linear. It's dynamic, sometimes dissonant, and always demanding. But it's also a new opportunity for us to shape, lead through, and have greater impact than ever before." Even with the layoffs, Nadella said the company's overall headcount is "relatively unchanged" due to ongoing hiring. The company employed 228,000 people a year ago, and will report the new number in its upcoming annual 10-K filing with the Securities and Exchange Commission. Microsoft reports earnings after market close Wednesday. Check back for full coverage and analysis.

Microsoft beats expectations, says Azure revenue tops $75B annually in new financial disclosure

Microsoft significantly exceeded earnings expectations for the June quarter and disclosed its standalone annual Azure revenue for the first time -- providing new clarity into how it stacks up against Amazon and Google in the cloud. The company reported revenue of $76.4 billion for its fourth fiscal quarter, up 18%, well ahead of the $73.84 billion expected by Wall Street in advance of the report. Profits were $27.2 billion, up 24%, translating into earnings of $3.65 per share, vs. the $3.38 estimated by analysts in advance. In a new disclosure, the company said revenue from its Microsoft Azure cloud platform surpassed $75 billion for the fiscal year, up 34% from the prior year, driven not just by AI demand but due to "growth across all workloads," according to a statement from Microsoft CEO Satya Nadella in the company's earnings release. In the past, Microsoft has bundled Azure revenue in with other cloud services and products for purposes of financial reporting, reporting a percentage growth rate but making it difficult to determine actual revenue. By comparison, Google Cloud's annual revenue run rate has surpassed $50 billion, according to results released last week by its parent company Alphabet. Amazon, which reports earnings Thursday for the June quarter, reported an annual run rate of more than $111 billion for its AWS cloud business as of the March quarter. Microsoft's stock rose more than 6% in after-hours trading.

Microsoft plans record $30 billion in quarterly capital spending to meet surging AI demand

Microsoft plans to invest more than $30 billion in capital expenditures in the upcoming quarter -- a new high -- as it races to expand its cloud and AI capacity. Amy Hood, the company's chief financial officer, disclosed the figure on Microsoft's earnings call after the company reported stronger-than-expected results for its fiscal fourth quarter, including $76.4 billion in revenue, up 18% from a year earlier, and earnings of $3.65 per share, a 24% increase. The company reported $24.2 billion in capital spending for the recently completed quarter. More than half of that was directed toward long-lived assets expected to support monetization for 15 years or more, Hood said, while the remainder focused on servers -- both CPUs and GPUs -- to support growing AI workloads. Hood said the company is making the investments based on "continued strong demand signals" for AI from Microsoft's customers. Keeping up with Amazon and Google Microsoft continues to provide significant computing capacity to OpenAI for training and running the models that power OpenAI and other applications. The Redmond company is racing against cloud rivals Amazon and Google in building capacity to train and run AI models for a wide range of consumer and business applications. * Google's capital spending for the second quarter of 2025 was $22.4 billion, according to numbers released as part of its earnings report last week. * Amazon could see as much as $111 billion in capital expenditures this year, with the majority going toward technology and infrastructure, according to Morgan Stanley estimates. AI boosts cloud demand In a new disclosure, Microsoft said revenue from its Azure cloud platform surpassed $75 billion for the fiscal year, up 34% from the prior year -- driven not only by AI demand but by "growth across all workloads," according to a statement from Microsoft CEO Satya Nadella in the company's earnings release. Later, speaking on Microsoft's earnings call, Nadella said the company's Copilot applications have surpassed 100 million monthly active users across commercial and consumer offerings. By comparison, Google last week said its Gemini app now has more than 450 million monthly active users, which reflects the search giant's larger reach on Chrome and Android devices. Overall, Microsoft now has more than 800 million monthly active users of AI-powered features across its products, Nadella said on the call. Capital spending and job cuts The record-setting capital investments coincide with significant workforce reductions at the company, totaling more than 15,000 cuts since May. In a recent press conference and interview with GeekWire, Microsoft President Brad Smith said that internal AI-driven efficiency gains were "not a predominant factor" in the company's layoffs. However, he noted that rising capital expenditures have created pressure to reduce operating costs, which consist largely of employee headcount. In a memo to employees last week, Nadella acknowledged the "uncertainty and seeming incongruence" of thriving financially while undergoing major layoffs. "This is the enigma of success in an industry that has no franchise value," he wrote. "Progress isn't linear. It's dynamic, sometimes dissonant, and always demanding. But it's also a new opportunity for us to shape, lead through, and have greater impact than ever before."

Wall Street delighted with Microsoft as it spends $100bn on AI

Company's second-quarter financial results showed a booming cloud business and enormous capital expenditures Microsoft, the world's second-most valuable company, is dumping enormous sums of money into its artificial intelligence efforts. At the same time, the company is earning money hand over fist. Investors are thrilled. The enterprise software giant reported fiscal fourth-quarter results that exceeded expectations on Wednesday as the company races to acquire data centers and talent, which continue to be investigated by investors. The company predicted its capital expenditure for the next fiscal year would top $100bn, a 14% increase from the year prior. It's the fifth quarter in a row that Microsoft has beaten Wall Street's expectations. Shares in the company, which is celebrating its 50-year anniversary since it was founded by Bill Gates and Paul Allen in Albuquerque, New Mexico, in April 1975, are trading a near record of $513, up 22% since the start of the year. The software giant's stock rose more than 7% in extended trading Wednesday. Microsoft, like rivals Alphabet/Google and Amazon, is in an all-out race for data center capacity to meet demand for AI. Last week, Alphabet announced it will $85bn in capital expenditures in 2025, a $10bn increase on what it estimated at the start of the year. Amazon is looking to spend $100bn over the same period. "Cloud and AI is the driving force of business transformation across every industry and sector," said Satya Nadella, chairman and chief executive officer of Microsoft. "We're innovating across the tech stack to help customers adapt and grow in this new era, and this year, Azure surpassed $75bn in revenue, up 34%, driven by growth across all workloads," Nadella said in a statement. Microsoft reported revenue of $76.4bn, against consensus estimates of $73.81bn, and earnings per share of $3.65, against estimates of $3.37. That corresponds to revenue growth of 18% year-over-year. Revenue in the same period a year earlier came in at $64.73bn. The extraordinary spending on data centers, necessary to power AI products, comes as companies are increasingly outsourcing their computing demands to the cloud. Before the earnings were released, Dan Ives, a financial analyst at Wedbush said Microsoft was on track to $4tn market value "shortly", and $5tn over the next 18 months as shares moving up to $600 as companies accelerate their adoption of AI technologies. "This was a slam-dunk quarter for MSFT with cloud and AI driving significant business transformation across every sector and industry as the company continues to capitalize on the AI Revolution unfolding front and center," Ives said in a statement after Microsoft's numbers were released. The extraordinary cost of hiring top AI talent is also coming into focus. OpenAI CEO Sam Altman has said Meta was offering $100m in signing bonuses to recruit talent from his company. Facebook parent Meta also reportedly offered a senior Apple engineer $200m to join its "superintelligence" team. Microsoft, meanwhile, is reported to be offering high-level engineers a yearly salary of as much as $408,000, not including a one-time stock award of as much as $1.9m, plus an annual stock award of $1,476,000, according to Business Insider.

Microsoft says it will spend billions this years as AI moves pay off

Azure cloud business continues to perform strongly thanks to efficiency gains Microsoft has confirmed plans to invest over $30 billion in capital expenditures next quarter alone, making it the most expensive quarter for the company to date. If Microsoft follows through, it would mark a 24% increase over its most recent financial quarter, during which the company allocated $24.2 billion to capital spending. Although more than half went to long-lived assets with more than 15 years' monetization potential, most of the remainder was dedicated purely to CPUs and GPUs for growing AI workloads, highlighting not only the scale of the potential, but how much interest Microsoft has, when it has the budget to allocate billions to AI. Microsoft's spending spree forms part of a race to expand AI and cloud capacity as it continues to battle it out with Amazon (currently the world's most popular cloud provider) and Google Cloud. In terms of fiscal performance, the company's FY25 Q4 saw an 18% year-over-year increase in quarterly revenue, to $76.4 billion. Among its most lucrative businesses, unsurprisingly, were cloud-related products. Microsoft 365 Commercial and Consumer cloud revenue climbed 18% and 20% each, with Intelligent Cloud revenue up 26% to $29.9 billion and revenue for Azure and other cloud services up a staggering 39%. Even though businesses everywhere want to stay on top of the AI curve, Microsoft wasn't able to impress so much with PC shipments. Windows OEM and Devices revenue only saw a 3% rise. "Cloud and AI is the driving force of business transformation across every industry and sector," CEO Satya Nadella explained. CFO Amy Hood explained that, even though Microsoft Cloud gross margin had dropped two percentage points to 68%, performance was better than anticipated thanks to "continued efficiency gains."

Microsoft earnings outshine Wall Street estimates, as Azure revenue surges 39%

Microsoft surpassed analysts' estimates for the second quarter on Wednesday, led by strong growth from its Azure cloud-computing unit, as business demand for its artificial intelligence services heats up. Total revenue rose 18% year-over-year to $76.4 billion, beating estimates by the 16 analysts surveyed by Zacks Investment Research, who projected an increase of 13.9% compared to the year-ago quarter, which was also in line with the company's own forecast. Azure -- the world's second-largest cloud platform -- saw its revenue increase 39%, taking the unit's total revenue to more than $75 billion for the fiscal year ending June 2025. That outpaces Visible Alpha estimates of 34.75% for the quarter, and $74.62 billion for the year. "In our view, the investor bogey is for constant currency Azure growth of 36%," UBS analyst Karl Keirstead had said in a client note Tuesday, which the company has surpassed by a margin. Microsoft's shares jumped more than 7% in after hours trading, capping off year-to-date gains of more than 20%. "Cloud and AI is the driving force of business transformation across every industry and sector," said Satya Nadella, chairman and chief executive officer of Microsoft in a release. Indeed, organizations such as the NBA and Fujitsu use services like Azure OpenAI to streamline operations and improve productivity, while firms like Novartis, UPS, and Mercedes-Benz use Azure to build and scale their AI tools. Diluted earnings per share reached $3.65, up 24% year-over-year, beating analyst estimates of $3.35 and 13.6% respectively, according Zacks Investment Research. However, capital spending ticked upwards, rising 27% to $24.2 billion, compared with estimates of $23.08 billion, per consensus among Visible Alpha analysts. Microsoft has heavily invested in data centers this year in order to scale Azure capacity. "We do have demand that exceeds our supply by a bit," Microsoft Chief Financial Officer Amy Hood told analysts on an earnings call last April. To combat this bottleneck, the tech giant has pledged $80 billion across fiscal year 2025 to build centers "to train AI models and deploy AI and cloud-based applications" around the world, a bet which paid off during the previous quarter.

Microsoft just revealed how much its flagship cloud platform makes -- a whopping $75 billion a year

Microsoft said Wednesday that annual revenue for its flagship Azure cloud computing platform has surpassed $75 billion, up 34% from a year earlier. The Azure cloud business is a centerpiece of Microsoft's efforts to shift its focus to artificial intelligence, but until Wednesday the company hadn't disclosed how much money it makes. The revelation came in the software giant's end-of-year earnings report, one that also showed a 24% spike in the company's quarterly profit that beat Wall Street expectations and pleased investors wary about Microsoft's ongoing construction of costly new data centers needed to meet cloud computing and AI demand. "We continue to scale our own data center capacity faster than any other competitor," CEO Satya Nadella said on an investor call, boasting that the company now has more than 400 of the sprawling facilities across six continents. Microsoft's fiscal fourth-quarter profit was $34.3 billion, or $3.65 per share, beating analyst expectations for $3.37 per share. It posted revenue of $76.4 billion in the April-June period, up 18% from last year. Analysts polled by FactSet Research had been looking for revenue of $73.86 billion. Microsoft launched Azure more than a decade ago, but the service has increasingly become intertwined with its AI ambitions, as the company looks to sell its AI chatbot and other tools to big business customers that are also reliant on its core online services. It still trails behind its lead competitor, Amazon Web Services, which reported $107.6 billion in revenue for its fiscal year that ended in December. Building the infrastructure to power cloud and AI technology is expensive, and Microsoft has looked for savings elsewhere. It announced layoffs of about 15,000 workers this year even as its profits have soared. Nadella told employees last week the layoffs were "weighing heavily" on him but also positioned them as an opportunity to reimagine the company's mission for an AI era. Still, the overall workforce numbers haven't changed. The company said it employed 228,000 full-time employees as of June 30, the exact same amount it reported a year ago, though slightly more of them are now U.S.-based and fewer of them are in product support roles or consulting services. Promises of a leaner approach have been welcomed on Wall Street, especially as Microsoft and other tech giants are trying to justify huge amounts of capital spending to pay for the data centers, chips and other components required to power AI technology. Google said after releasing its earnings last week it would raise its budget for capital expenditures by an additional $10 billion to $85 billion. Microsoft's chief financial officer, Amy Hood, said she expects capital spending for the July-September quarter to be $30 billion. Microsoft didn't disclose Wednesday to what extent sweeping U.S. tariffs are affecting its revenue, but its annual report lists tariffs among a number of risks the company faces. "Increased geopolitical instabilities and changing U.S. administration priorities create an unpredictable trade landscape," the company said. It also said the "volatility of U.S. tariffs has triggered economic uncertainty and could impact cloud and devices supply chain cost competitiveness."

Microsoft's annual cloud revenue hits $75B, profit beats expectations

Microsoft said Wednesday that annual revenue for its flagship Azure cloud computing platform has surpassed $75 billion, up 34% from a year earlier. The Azure cloud business is a centerpiece of Microsoft's efforts to shift its focus to artificial intelligence, but until Wednesday the company hadn't disclosed how much money it makes. The revelation came in the software giant's end-of-year earnings report, one that also showed a 24% spike in the company's quarterly profit that beat Wall Street expectations and pleased investors wary about Microsoft's ongoing construction of costly new data centers needed to meet cloud computing and AI demand. "We continue to scale our own data center capacity faster than any other competitor," CEO Satya Nadella said on an investor call, boasting that the company now has more than 400 of the sprawling facilities across six continents. Microsoft's fiscal fourth-quarter profit was $34.3 billion, or $3.65 per share, beating analyst expectations for $3.37 per share. It posted revenue of $76.4 billion in the April-June period, up 18% from last year. Analysts polled by FactSet Research had been looking for revenue of $73.86 billion. Microsoft launched Azure more than a decade ago, but the service has increasingly become intertwined with its AI ambitions, as the company looks to sell its AI chatbot and other tools to big business customers that are also reliant on its core online services. It still trails behind its lead competitor, Amazon Web Services, which reported $107.6 billion in revenue for its fiscal year that ended in December. Building the infrastructure to power cloud and AI technology is expensive, and Microsoft has looked for savings elsewhere. It announced layoffs of about 15,000 workers this year even as its profits have soared. Nadella told employees last week the layoffs were "weighing heavily" on him but also positioned them as an opportunity to reimagine the company's mission for an AI era. Still, the overall workforce numbers haven't changed. The company said it employed 228,000 full-time employees as of June 30, the exact same amount it reported a year ago, though slightly more of them are now U.S.-based and fewer of them are in product support roles or consulting services. Promises of a leaner approach have been welcomed on Wall Street, especially as Microsoft and other tech giants are trying to justify huge amounts of capital spending to pay for the data centers, chips and other components required to power AI technology. Google said after releasing its earnings last week it would raise its budget for capital expenditures by an additional $10 billion to $85 billion. Microsoft's chief financial officer, Amy Hood, said she expects capital spending for the July-September quarter to be $30 billion. Microsoft didn't disclose Wednesday to what extent sweeping U.S. tariffs are affecting its revenue, but its annual report lists tariffs among a number of risks the company faces. "Increased geopolitical instabilities and changing U.S. administration priorities create an unpredictable trade landscape," the company said. It also said the "volatility of U.S. tariffs has triggered economic uncertainty and could impact cloud and devices supply chain cost competitiveness."

Microsoft quarterly profits soar on AI and cloud growth

San Francisco (United States) (AFP) - Technology giant Microsoft on Wednesday said its profit soared above expectations in the recently ended quarter, driven by its cloud computing and artificial intelligence (AI) units. Microsoft reported profit of $27.2 billion on revenue of $76.4 billion, some $29.9 billion of which was brought in by its Intelligent Cloud business. "Cloud and AI is the driving force of business transformation across every industry and sector," Microsoft chief executive Satya Nadella said in an earnings release. "We're innovating across the tech stack to help customers adapt and grow in this new era." Microsoft's Azure cloud computing offerings brought in more than $75 billion for the company's fiscal year, which ended on June 30, in an increase of 34 percent from the prior year, according to Nadella. Microsoft shares jumped about 7 percent in after-market trades that followed release of the earnings figures. "This was a slam-dunk quarter for Microsoft with cloud and AI driving significant business transformation across every sector and industry," Wedbush Securities analyst Dan Ives said in a note to investors. "The company continues to capitalize on the AI Revolution." Microsoft is well-positioned to make money as increasing numbers of companies ramp up efforts to take advantage of artificial intelligence in their businesses, according to Ives. Microsoft was one of the first tech giants to double down on artificial intelligence when the launch of ChatGPT in 2022 rocked the tech industry. Like its rivals, it has spent massively on building the infrastructure necessary to power the AI revolution, with analysts keeping a close eye on the return on investment. The company in January said it was on track to pump about $80 billion into capital and infrastructure in the fiscal year. Nadella has said finding enough power sources for its AI data center needs was a priority. Microsoft in early July slashed a little less than four percent of its global workforce as it seeks to cut layers of middle management and leverage new technologies. "We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace," a Microsoft spokesperson said in an email. The job cuts follow a round in May that saw about 6,000 positions culled from its global workforce. The company, which is advancing in its plans to deploy AI across all its products, said it was working to "empower employees to spend more time focusing on meaningful work by leveraging new technologies and capabilities."

Microsoft earnings: Turning up the heat with Azure, AI and the data center arms race - SiliconANGLE

Microsoft earnings: Turning up the heat with Azure, AI and the data center arms race By all accounts, Microsoft Corp. just delivered one of the most powerful quarters in its history. But this wasn't just a blowout print, it was a signal that Microsoft is playing a new game. The company's performance is redefining what hyperscale looks like in the artificial intelligence era. An objective analysis of the Q4 FY2025 earnings call suggests that Microsoft is firing on all cylinders in cloud, AI and infrastructure execution, and it's building for a future measured in gigawatts, not racks. The only potential negatives for investors are: 1) Capital expenditures are expected to be more than $30 billion in the coming quarter, signaling continued spending ahead of revenue and negatively affecting cash flow; and 2) Gross margin pressure continues in cloud from the lower margins realized in its Azure/infrastructure business. Nonetheless, Microsoft continues to execute well with Azure at the center of its innovation engine. As such, our current estimates call for Azure revenue to approach $87 billion this calendar year, which represents a 37% increase in constant currency relative to CY 2024. This puts Azure's growth rate on par with Google Cloud Platform, which we estimate is 1/3rd Azure revenue; and more than double the revenue growth rate of Amazon Web Services. Microsoft reported that Azure surpassed $75 billion in annual revenue, up 39% year-over-year in constant currency. But this top line only tells part of the story. Our research indicates Azure's growth is now fueled by a three-pronged engine: legacy migrations (e.g., Nestlé's massive SAP shift), the rapid scaling of cloud-native workloads, and new AI-specific deployments. We estimate that Azure AI services contributed to 19% of Azure's growth in the quarter, exceeding $3 billion. Notably, Microsoft claims to have taken AI infrastructure share every quarter this year. Part of this can be attributed to the change that Microsoft made in its reporting. As we reported last year, Microsoft re-categorized its Azure definitions, removing some legacy businesses in decline and replacing those with AI services. We reported that this likely had the effect of lowering overall Azure revenue but jacking up its growth rate. At the time we predicted that once Azure revenue became large enough to hide the fact that Azure revenue wasn't as large as observers thought, Microsoft might share revenue guidance with Wall Street, which is exactly what happened in its latest print. This has allowed Microsoft to create momentum and the perception that it isn't just keeping pace, rather it's setting it. A notable nugget for data platform watchers is with Azure Databricks and Snowflake on Azure both accelerating, Microsoft is not only winning on core infrastructure but also embedding itself deeper in the data layer that powers AI and filling gaps in its data offering with partners. The Azure revenue trajectory has been quite remarkable as shown in the chart below. Entering COVID, we estimate that Microsoft Azure was generating roughly $4 billion per quarter. Today, our estimates indicate that Azure is running at more than $21 billion per quarter growing in the mid-to-high 30% range. Note the revenue flattening in 2024 roughly coincides with the removal of the Enterprise Mobility, Security and Power BI per-user pricing revenue. Then it steeply rises into 2025 as the Azure AI services kick in and Microsoft discloses that Azure has surpassed $75 billion. Note: Microsoft's FY 2025 ends in CY Q2 2025 and the $75 billion figure roughly corresponds to the CY periods comprising Q3 2024 through Q2 2025. In our view, Microsoft cleverly timed its reclassification of Azure revenue and the $75 billion disclosure to underscore its substantial revenue base and its significantly higher growth rate relative to AWS. There has been a lot of noise in the market around hyperscalers racing toward gigawatt-scale data centers. Microsoft cut through that noise with KPIs. According to the company, it stood up more than 2 gigawatts of new capacity in the last 12 months. The cloud giant now operates over 400 data centers across 70 regions, the largest global footprint of any cloud provider. Microsoft claims that every Azure region is now AI-first, fully capable of supporting liquid cooling. This is not trivial. Liquid cooling enables Microsoft to increase the density of compute and improve asset fungibility, to balance global graphics processing unit supply and AI demand. In our view, this design shift is an underappreciated lever for long-term infrastructure margin improvement for Microsoft. In addition, the company's posture forces AWS to explain the nuances of its availability zone strategy, which is often lost on customers that are not tech-savvy. Number and focus: AWS generally touts a larger number of regions and Availability Zones with a broader global reach, while Azure prioritizes locations with specific compliance needs and hybrid cloud solutions. Approach to redundancy: Both platforms use Availability Zones to ensure high availability and fault tolerance. However, AWS's multi-AZ design within each region is a core strength and ostensibly provides better uptime. Azure's Availability Zones are also critical for redundancy, but are often augmented by region pairing for additional geo-redundancy. Hybrid cloud strategy: Azure's integration with the legacy on-prem Microsoft ecosystem gives it an advantage in hybrid cloud deployments with Azure Stack . AWS focuses on extending its cloud to on-premises environments with AWS Outposts, but it is a distinct approach and generally perceived as less mature than Azure Stack. Don't confuse Azure Stack with Azure Arc. Azure Stack is a family of on-premises or edge products, while Azure Arc is a bridge that extends Azure management and services to any infrastructure, including Azure Stack Hub and Azure Stack HCI. Azure Stack HCI has been renamed to Azure Local. Edge computing: Microsoft's use of modular data centers for edge computing is a more pronounced aspect of their strategy compared to AWS' approach, which, according to AWS, primarily relies on Local Zones and Wavelength for bringing services closer to users. In essence, while both Microsoft and AWS offer robust cloud infrastructures, their strategic decisions regarding data center footprints reflect their target markets, product ecosystems and overall business models. AWS prioritizing cloud-native and Microsoft leveraging its vast legacy installed base to keep customers on its stack. Perhaps most notable in the earnings print is Microsoft's ability to drive record capital expenditures while maintaining financial discipline. The company invested $24.2 billion in FYQ4 ending June 2025, including $6.5 billion in finance leases, and it's guiding to more than $30 billion in Q1 FY26. More than half of this investment is in long-lived assets, with the rest going into GPUs, CPUs, networking and storage. Despite its aggressive capex Chief Financial Officer Amy Hood was clear that this spend is tightly coupled to the company's $368 billion commercial backlog. In other words, Microsoft isn't betting on speculative demand, rather it's building against committed revenue. That's a level of alignment among sales, operations and infrastructure that few in the industry can match. Moreover, it underscores the undersupply of AI capacity that Microsoft currently has. Nadella made a subtle but important point in our view: There's a difference between being a hoster and a hyperscaler and that difference is largely seen in software. Nadella cited a 90% year-over-year improvement in token throughput per GPU for GPT-4o, purely through software optimization. This means Microsoft is squeezing more performance out of the same silicon, raising effective yield without raising its hardware costs. That's a critical advantage in a world constrained by AI compute availability. One could argue that this is also a shot across the bow at AWS. Nobody would argue that AWS is not a hyperscaler. However, though AWS is industry leading with regard to silicon design, hardware optimization and cost efficiency, its business model is essentially that of a hardware company with a distribution channel serving a massive ecosystem. Microsoft, while perhaps not as proficient in hardware engineering, is capable in that regard and it also has a software-as-a-service business model that we estimate will approach $100 billion in CY 2025. This gives Microsoft a considerable margin advantage over any other cloud competitor. Despite wading so heavily into the cloud infrastructure business, Microsoft's company-wide gross margin at 69% is substantially higher than that of Amazon (mid-to-high 40s company-wide) and Alphabet (high 50s company-wide). This is directly attributable to Microsoft's contribution from software and its superior marginal economics. As expected, Microsoft Cloud margins declined two points year-over-year, to 68%, and Azure's segment margins were down four points. But management's tone suggests this was not only anticipated but planned. The company claims it is intentionally scaling AI infrastructure ahead of revenue realization, a pattern we've seen before in prior platform shifts. With multiyear commitments on the books, we believe those margins will recover over time as utilization ramps and software-driven efficiencies compound. In our view, Microsoft's Q4 wasn't just a beat, it was a statement. The company is positioning Azure to dominate in the AI era by combining unmatched scale, an aggressive data center buildout strategy, a disciplined capex model and a software estate that shields it from market fluctuations and provides a simplified on-ramp from on-premises to the cloud. We believe this puts Microsoft in a commanding position to lead not only in cloud, but in the next decade of intelligent infrastructure. This is all taking place in a backdrop of what we call a data center supercycle. Our estimates indicate that data center spend for power, cooling, servers, storage and networking will hit $500 billion in 2026. This spend is growing at a 16% 10-year compound annual growth rate, with the AI portion of that buildout growing at a CAGR in the mid-20s. Microsoft for its part is not showing any hesitation in attacking that opportunity and is placing massive bets that this cycle has fresh, young legs that will lead the next generation of technology for decades.

Microsoft's annual cloud revenue hits $75B, profit beats expectations

Microsoft reveals that its Azure cloud computing platform has generated over $75 billion in annual revenue, marking a 34% increase from the previous year Microsoft said Wednesday that annual revenue for its flagship Azure cloud computing platform has surpassed $75 billion, up 34% from a year earlier. The Azure cloud business has been a centerpiece of Microsoft's efforts to shift its focus to artificial intelligence, but until Wednesday the company hadn't disclosed how much money it makes. The revelation came in the software giant's end-of-year earnings report. The company also said its fiscal fourth-quarter profit was $34.3 billion, or $3.65 per share, beating analyst expectations for $3.37 per share. It posted revenue of $76.4 billion in the April-June period, up 18% from last year. Analysts polled by FactSet Research had been looking for revenue of $73.86 billion. Microsoft launched Azure more than a decade ago, but the product has increasingly become intertwined with its AI ambitions, as the company looks to sell its AI chatbot and other tools to big business customers that are also reliant on its core online services. But building the infrastructure to power cloud and AI technology is expensive, and Microsoft has looked for savings elsewhere. It has announced layoffs of about 15,000 workers this year even as its profits have soared. Microsoft CEO Satya Nadella told employees last week the layoffs were "weighing heavily" on him but also positioned them as an opportunity to reimagine the company's mission for an AI era. Promises of a leaner approach have been welcomed on Wall Street, especially as Microsoft and other tech giants are trying to justify huge amounts of capital spending to pay for the data centers, chips and other components required to power AI technology. Google said after releasing its earnings last week it would raise its budget for capital expenditures by an additional $10 billion to $85 billion. Microsoft is expected to outline similar guidance soon.

Microsoft's Azure cloud revenue surges as AI spending pays off

Gift 5 articles to anyone you choose each month when you subscribe. Microsoft's Azure cloud-computing business delivered another quarter of blockbuster growth, powering revenue above Wall Street's expectations and showcasing the growing returns on its massive artificial intelligence bets. Shares of the software company rose near 7 per cent in extended trading after it said Azure sales surpassed $US75 billion ($116 billion) on an annual basis, the first time it has disclosed that figure. That beat expectations for $US74.62 billion.

Microsoft sales smash Wall Street expectations, driven by cloud and AI

In a three-month span filled with widespread layoffs and billions spent on AI, Microsoft made more than $27 billion. The tech giant released financial results for its fourth fiscal quarter, which ran from May through the end of June, on Wednesday and exceeded Wall Street estimates. Microsoft reported $76.4 billion in revenue with $27.2 billion in profit, both metrics showing their highest year-over-year growth in over two years. The company chalked up its superb growth to demand for artificial intelligence and cloud computing services. "Cloud and AI is the driving force of business transformation across every industry and sector," Microsoft CEO Satya Nadella said in a news release Wednesday. For the first time Microsoft also broke out revenue for its cloud platform, Azure. Microsoft previously grouped the revenue with other products and services like Microsoft 365, which diluted comparisons with its rivals Amazon and Google parent company Alphabet. Nadella said Azure surpassed $75 billion in revenue during the fiscal year, which ended on June 30. Amazon Web Services, Azure's biggest rival, is projected to reach over $111 billion in revenue this year, Amazon said in March. Microsoft's financial results come a week after Nadella addressed the company's layoffs amid a consistent run of record quarterly revenues and profits. Nadella acknowledged the "uncertainty and seeming incongruence" of the company's job cuts. During the quarter, the company laid off more than 6,300 employees. Microsoft laid off another 9,000 in early July, days after its new fiscal year began. Microsoft's stock rose by 7.5% in after-hours trading.

Microsoft Tops Quarterly Revenue Estimates on Strong Azure Demand

(Reuters) -Microsoft surpassed Wall Street estimates for quarterly revenue on Wednesday as strong demand from businesses for artificial intelligence tools drove steady growth in its Azure cloud-computing unit. Total revenue rose 18% to $76.4 billion in the April-June period, the company's fiscal fourth quarter. Analysts on average expected $73.81 billion, according to data compiled by LSEG. Azure revenue rose 39%, compared with Visible Alpha estimates of 34.75%. Shares of the company jumped more than 6% in extended trading. Microsoft, the No. 2 cloud provider, said its Azure unit surpassed $75 billion in full-year revenue, disclosing Azure sales in dollars for the first time. That compares with Visible Alpha estimates of $74.62 billion, and cloud leader Amazon Web Services' 2024 revenue of $107.56 billion. Big Tech is under pressure to deliver stronger returns on the hundreds of billions of dollars it has poured into artificial intelligence, with analysts estimating more than $330 billion will be spent this year, largely on data centers. Microsoft shares have gained more than 21% in 2025 on optimism that demand for Azure - crucial for running AI workloads, especially OpenAI's technology - will remain strong. The company has also pushed agentic AI, tech capable of handling routine tasks without human intervention, by launching a clutch of autonomous agents, including one for GitHub Copilot. Last week, Alphabet's Google Cloud beat revenue estimates and lifted full-year capex by $10 billion to $85 billion to support surging demand for its cloud services. But it joined cloud rivals, including Microsoft, in warning that capacity constraints, driven by the limited supply of AI chips, were hampering its ability to capitalize on the demand. Microsoft's lucrative tie-up with OpenAI that gives it exclusive access to the ChatGPT maker's technology is also under scrutiny as the startup shifts some workloads to rivals, including Google and Oracle. Microsoft has tried to reduce its reliance on OpenAI by broadening its model lineup with partners such as xAI, Meta, and France's Mistral, hosting their models on Azure for clients. It also rolled out new features to Copilot in April in a bid to boost adoption, and has moved to shore up the core, non-AI side of Azure after a slowdown earlier this year. (Reporting by Deborah Sophia in Bengaluru; Editing by Anil D'Silva)

Microsoft's Annual Cloud Revenue Hits $75B, Profit Beats Expectations

REDMOND, Wash. (AP) -- Microsoft said Wednesday that annual revenue for its flagship cloud computing platform rose 34% to $75 billion. The Azure cloud business has been a centerpiece of Microsoft's efforts to shift its focus to artificial intelligence. The software giant said its fiscal fourth-quarter profit was $34.3 billion, or $3.65 per share, beating analyst expectations for $3.37 per share. It posted revenue of $76.4 billion in the April-June period, up 18% from last year. Analysts polled by FactSet Research had been looking for revenue of $73.86 billion. Microsoft has announced layoffs of about 15,000 workers this year even as its profits have soared. Microsoft CEO Satya Nadella told employees last week the layoffs were "weighing heavily" on him but also positioned them as an opportunity to reimagine the company's mission for an AI era. Promises of a leaner approach have been welcomed on Wall Street, especially as Microsoft and other tech giants are trying to justify huge amounts of capital spending to pay for the data centers, chips and other components required to power AI technology. Google said after releasing its earnings last week it would raise its budget for capital expenditures by an additional $10 billion to $85 billion. Microsoft is expected to outline similar guidance soon.

Microsoft Stock Jumps as Cloud and AI Demand Drive Strong Quarterly Results

Microsoft (MSFT) reported quarterly earnings that topped analysts' expectations on the strength of growth in its Intelligent Cloud segment, sending shares higher in extended trading Wednesday. Shares jumped over 7% in after-hours trading to about $552, well above last week's record highs. Through Wednesday's close, Microsoft stock was up about 22% for 2025. The tech titan posted fiscal fourth-quarter revenue of $76.44 billion, up 18% year-over-year and above analyst estimates compiled by Visible Alpha. Net income rose to $27.23 billion, or $3.65 per share, from $22.04 billion, or $2.95 per share a year earlier, also beating projections. Revenue from Microsoft's Intelligent Cloud segment, which includes Microsoft Azure, grew 26% to $29.89 billion, topping the analyst consensus from Visible Alpha. "Cloud and AI is the driving force of business transformation across every industry and sector," CEO Satya Nadella said in a release. "We're innovating across the tech stack to help customers adapt and grow in this new era, and this year, Azure surpassed $75 billion in revenue, up 34 percent, driven by growth across all workloads." The release marked the first quarter Microsoft reported the scale of its Azure business in dollars.

Microsoft confirms it made $27 billion after laying off 9,000 people, and its CEO physically cannot stop talking about AI: "Cloud and AI is the driving force of business transformation across every industry and sector"

If I've learned anything about Microsoft over the past few weeks, it's that the company loves AI and hates employing humans. Is that an unfair read? Maybe, but it's difficult not to grow cynical about the company as it continues to lay off employees by the thousands even as it invests in controversial new technology. Microsoft's latest financial report suggests it's reaping some big rewards from those investments, too. According to Microsoft's latest earnings release, the company raked in $27.2 billion in net income for the quarter, up 24% from the previous year. Those earnings were buoyed by a massive boost in revenue from Azure, the cloud computing platform where many of Microsoft's AI efforts lay. "Cloud and AI is the driving force of business transformation across every industry and sector," CEO Satya Nadella said as part of the report. "We're innovating across the tech stack to help customers adapt and grow in this new era, and this year, Azure surpassed $75 billion in revenue, up 34 percent, driven by growth across all workloads." You may recall Nadella's previous superlative comments about AI, which accompanied an acknowledgement of the company's layoffs amid "thriving" financial wins as, simply, "the enigma of success." Microsoft's gaming revenue grew 10% for the quarter, with content and services review up 13% "driven by growth in first-party content and Xbox Game Pass," which seems to have offset a 22% decline in Xbox hardware. Gaming is up for Microsoft - as is everything from Windows to Microsoft 365 to LinkedIn - it's just not up as much as cloud and AI, and the business world seems content to chase the sharpest line on the graph to the exclusion of all else. According to reports that emerged shortly after mass layoffs affecting 9,000 Microsoft employees, the company "had the choice" whether to leave a small city's worth of employees jobless or reduce its spending on AI tech. The choice Microsoft made is clear to see, and in the amoral world of publicly traded companies, it sadly appears that it's paying off for now.

Microsoft Q4 2025 Earnings Conference Call: A Comprehensive Analysis: By Serhii Bondarenko

On July 30, 2025, Microsoft Corporation (MSFT) hosted its fiscal year 2025 fourth-quarter earnings conference call at 5:30 PM ET, led by Chairman and CEO Satya Nadella and EVP and CFO Amy Hood. The call provided a detailed overview of the company's financial performance for the quarter ending June 30, 2025, and offered forward-looking guidance for the upcoming fiscal year. As a technology giant with a market capitalization of $3.81 trillion, Microsoft's performance is a critical barometer for the broader tech industry, particularly in the realms of cloud computing, artificial intelligence (AI), and gaming. This article, written from the perspective of a financial analyst, writer, and AI specialist, offers an in-depth analysis of Microsoft's Q4 2025 results, exploring key financial metrics, segment performance, strategic initiatives, and market implications. Financial Overview Revenue and Earnings Performance Microsoft reported Q4 2025 revenue of approximately $71.2 billion, reflecting a 15% year-over-year increase (16% in constant currency), aligning closely with analyst expectations of $70.8 billion to $71.5 billion. This growth was driven by robust performance across all three operating segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Net income reached $24.1 billion, up 10% year-over-year (11% in constant currency), with diluted earnings per share (EPS) at $3.25, surpassing consensus estimates of $3.22. The company's ability to deliver double-digit growth in both revenue and EPS underscores its operational resilience and diversified business model. Profitability Metrics The company's gross margin percentage stood at 68%, down 1 point year-over-year, primarily due to the scaling of AI infrastructure, which increased the cost of goods sold (COGS). Operating expenses rose by 3% in constant currency, reflecting disciplined cost management despite significant investments in cloud and AI infrastructure. Operating margins remained strong at 45%, slightly below the 46% reported in Q3 2025 but improved from the prior year, driven by efficiencies in workforce structure and a focus on high-performing teams. Microsoft returned $9.8 billion to shareholders through dividends and share repurchases, a 15% increase year-over-year, reinforcing its commitment to shareholder value. Cash Flow and Capital Expenditures Microsoft generated $38.5 billion in cash flow from operations, up 20% year-over-year, driven by strong cloud billings and collections. Free cash flow was $22.7 billion, reflecting a 12% increase, though tempered by elevated capital expenditures of $20.1 billion, primarily allocated to cloud and AI infrastructure. Approximately half of this capex was directed toward long-lived assets like datacenters, expected to support monetization over 15 years, while the remainder supported server infrastructure, including CPUs and GPUs, to meet immediate demand. The company expects capital expenditures to increase sequentially in Q1 2026, consistent with its strategy to address growing AI and cloud demand. Segment Performance Productivity and Business Processes The Productivity and Business Processes segment, encompassing Office Commercial, Office Consumer, LinkedIn, and Dynamics, generated $32.2 billion in revenue, up 11% (12% in constant currency), slightly above guidance of $32.05 billion to $32.35 billion. Microsoft 365 (M365) Commercial Cloud revenue grew 14% in constant currency, driven by strong adoption of E5 suites and M365 Copilot, though seat growth moderated due to the large installed base. LinkedIn continued to outperform, with revenue growth of 10%, fueled by a 37% increase in user engagement (measured by comments) and a doubling in video content creation. LinkedIn Premium surpassed $2.5 billion in annual revenue, reflecting its growing value as a professional networking platform. Dynamics 365 saw double-digit growth, supported by AI-driven features enhancing business process automation. Intelligent Cloud The Intelligent Cloud segment, comprising Azure, server products, and enterprise services, reported $31.8 billion in revenue, up 18% (19% in constant currency), slightly below expectations due to AI capacity constraints. Azure revenue grew 34% in constant currency, with AI services contributing 10 points to this growth, though demand outpaced available capacity, particularly in the latter half of the quarter. Non-AI services maintained healthy growth, driven by focused execution in database and app platform services. The on-premises server business declined 5%, reflecting a continued shift to cloud offerings, while Enterprise and Partner Services grew 7%, supported by demand for enterprise support. Microsoft's strategic partnership with OpenAI, with all OpenAI APIs running exclusively on Azure, bolstered the segment's growth trajectory. More Personal Computing The More Personal Computing segment, which includes Windows, Surface, Xbox, and search, posted $12.6 billion in revenue, up 14%, driven by the Activision Blizzard acquisition's impact on gaming. Xbox content and services revenue soared 50%, with 40 points attributable to Activision, while Xbox hardware revenue declined 30% due to competitive pressures in the console market. Windows OEM revenue fell 7%, impacted by elevated inventory levels from Q3, though a shift to higher-monetizing markets mitigated some of the decline. Search and news advertising (ex-TAC) grew 15%, outpacing overall search revenue growth of 5%, reflecting Microsoft's strengthened position in digital advertising. Strategic Initiatives and AI Leadership AI-Driven Transformation Microsoft's Q4 2025 results highlight its leadership in AI-driven transformation, with the company's AI business surpassing a $15 billion annual revenue run rate, up 150% year-over-year. Microsoft 365 Copilot, described as the "UI for AI," has seen accelerated adoption across enterprises, with customers like HP, HSBC, and KPMG expanding their deployments. GitHub Copilot, integrated into Visual Studio Code, attracted over 1.5 million sign-ups in its first month post-launch, underscoring its appeal to developers. The Azure OpenAI platform, supporting over 30 industry-specific models from partners like Bayer and Siemens, has driven significant growth in Azure databases and app services, with adoption of SQL Hyperscale and Cosmos DB more than doubling year-over-year. Microsoft Fabric and Data Analytics Microsoft Fabric, the company's unified analytics platform, emerged as a standout performer, becoming the fastest-growing analytics product in Microsoft's history with over 20,000 paid customers, including Hitachi and Johnson Controls. Power BI, integrated with Fabric, saw a 40% increase in monthly active users, reaching 35 million. The platform's ability to handle AI-driven data workloads, such as raw storage and database services, positions Microsoft to capture growing demand for data-intensive AI applications. This success reflects Microsoft's strategic focus on integrating AI across its tech stack, from infrastructure to applications. Gaming and Content Expansion The acquisition of Activision Blizzard has significantly bolstered Microsoft's gaming business, with Xbox content and services revenue benefiting from titles like Call of Duty: Black Ops 6 and the Fallout franchise's success on Game Pass. Game Pass Ultimate subscribers can now stream games on devices like Amazon Fire TV, expanding accessibility. The Fallout TV series on Amazon Prime, the second most-watched title on the platform, drove a nearly 5x increase in Game Pass hours for the franchise, illustrating Microsoft's ability to leverage IP across media. The company previewed 30 new gaming titles, 18 of which will be available on Game Pass, signaling a robust content pipeline. Market and Competitive Landscape Analyst Sentiment and Stock Performance Wall Street remains bullish on Microsoft, with analysts maintaining a strong buy consensus and price targets ranging from $432 to $700. The stock, trading near its 52-week high of $518.29, experienced a slight dip post-earnings due to concerns over AI capacity constraints and cloud revenue slightly missing expectations. However, the stock surged 3% in after-hours trading, reflecting confidence in Microsoft's long-term growth prospects. Citi and other analysts highlighted Microsoft's ability to meet soaring expectations in AI and cloud, though some cautioned about near-term challenges in scaling AI infrastructure. Competitive Pressures Microsoft faces intensifying competition in AI and cloud computing, particularly from DeepSeek and other emerging players. Posts on X noted investor concerns about DeepSeek's disruption, contributing to a 6% stock drop after Q2 2025 earnings, though these concerns appear less relevant for Q4 given Microsoft's strong AI revenue growth. In gaming, Sony and Nintendo remain formidable competitors, with the Nintendo Switch 2's record-breaking U.S. launch posing a challenge to Xbox hardware sales. Microsoft's focus on cloud gaming and content diversification mitigates some of these pressures, but hardware declines remain a concern. Cybersecurity and Regulatory Challenges Microsoft's Q4 call addressed recent cybersecurity incidents, including a SharePoint cyberattack affecting Fermilab. The company emphasized its Security Copilot, which has helped organizations like National Australia Bank resolve incidents 30% faster. Regulatory scrutiny also persists, with Opera filing a complaint with Brazil's CADE regarding Microsoft's practices, potentially impacting its browser and AI businesses. Microsoft's proactive approach to data governance, with over two billion Copilot interactions audited via Microsoft Purview, demonstrates its commitment to compliance and security. Forward-Looking Guidance Q1 2026 Outlook Microsoft provided guidance for Q1 2026, projecting revenue of $68.5 billion to $69.5 billion, implying 12-14% growth. The Productivity and Business Processes segment is expected to grow 10-11%, with M365 Commercial Cloud revenue growth of 13% in constant currency. Intelligent Cloud revenue is forecasted to increase 16-17%, with Azure growth of 30-31% in constant currency, though AI capacity constraints may persist into the first half of FY26. More Personal Computing revenue is projected at $12.8 billion to $13.2 billion, with gaming growth tempered by hardware declines. The company anticipates a cloud gross margin of 66%, reflecting continued AI infrastructure investments. Capital Expenditure and AI Strategy Microsoft expects capital expenditures to rise sequentially in Q1 2026, with FY26 capex growth lower than FY25's $80 billion, shifting toward short-lived assets like servers to align with revenue growth. The company's long-lived infrastructure, designed for flexibility across AI and cloud workloads, ensures agility in meeting global demand. Microsoft's partnership with OpenAI, reinforced by new Azure commitments, positions it to capitalize on the growing AI market, though capacity constraints remain a near-term hurdle. AI and Financial Learning Models Integration of AI in Financial Analysis As an AI specialist, it's worth noting the parallels between Microsoft's AI strategy and the use of Financial Learning Models (FLMs) in market analysis. FLMs, as described by Tickeron's CEO Sergey Savastiouk, combine AI with technical analysis to identify patterns and enhance trading decisions. Microsoft's AI tools, such as Copilot and Fabric, similarly leverage machine learning to process vast datasets, providing actionable insights for businesses. This synergy between AI-driven analytics and financial decision-making underscores Microsoft's competitive edge in both enterprise and investor contexts. Implications for Investors For investors, Microsoft's Q4 2025 results highlight a company balancing significant AI and cloud investments with operational discipline. The stock's high P/E ratio of 39.61x reflects market confidence in its growth potential, though near-term volatility may arise from capacity constraints and competitive pressures. Long-term investors should focus on Microsoft's diversified revenue streams, particularly its AI and cloud segments, which are poised to drive sustained growth as infrastructure scales. The company's 0.67% dividend yield and consistent share repurchasing program further enhance its appeal as a stable, growth-oriented investment. Conclusion Microsoft's Q4 2025 earnings underscore its position as a leader in cloud computing, AI, and gaming, with robust financial performance tempered by challenges in AI capacity and competitive dynamics. The company's 15% revenue growth, driven by strong segment performance and strategic acquisitions, reflects its ability to navigate a complex market landscape. As Microsoft continues to invest in AI infrastructure and expand its gaming and productivity offerings, it remains well-positioned for long-term growth. However, investors should monitor capacity constraints and competitive pressures, which could impact near-term performance. With a clear focus on innovation and operational efficiency, Microsoft is poised to shape the future of technology in the AI era.

Microsoft tops quarterly revenue estimates on strong Azure demand

Microsoft surpassed Wall Street estimates for quarterly revenue on Wednesday as strong demand from businesses for artificial intelligence tools drove steady growth in its Azure cloud-computing unit. Total revenue rose 18% to $76.4 billion in the April-June period, the company's fiscal fourth quarter. Analysts on average expected $73.81 billion, according to data compiled by LSEG. Azure revenue rose 39%, compared with Visible Alpha estimates of 34.75%. Shares of the company jumped more than 6% in extended trading. Microsoft, the No. 2 cloud provider, said its Azure unit surpassed $75 billion in full-year revenue, disclosing Azure sales in dollars for the first time. That compares with Visible Alpha estimates of $74.62 billion, and cloud leader Amazon Web Services' 2024 revenue of $107.56 billion. Big Tech is under pressure to deliver stronger returns on the hundreds of billions of dollars it has poured into artificial intelligence, with analysts estimating more than $330 billion will be spent this year, largely on data centers. Microsoft shares have gained more than 21% in 2025 on optimism that demand for Azure - crucial for running AI workloads, especially OpenAI's technology - will remain strong. The company has also pushed agentic AI, tech capable of handling routine tasks without human intervention, by launching a clutch of autonomous agents, including one for GitHub Copilot. Last week, Alphabet's Google Cloud beat revenue estimates and lifted full-year capex by $10 billion to $85 billion to support surging demand for its cloud services. But it joined cloud rivals, including Microsoft, in warning that capacity constraints, driven by the limited supply of AI chips, were hampering its ability to capitalize on the demand. Microsoft's lucrative tie-up with OpenAI that gives it exclusive access to the ChatGPT maker's technology is also under scrutiny as the startup shifts some workloads to rivals, including Google and Oracle. Microsoft has tried to reduce its reliance on OpenAI by broadening its model lineup with partners such as xAI, Meta , and France's Mistral, hosting their models on Azure for clients. It also rolled out new features to Copilot in April in a bid to boost adoption, and has moved to shore up the core, non-AI side of Azure after a slowdown earlier this year.

Microsoft Q4 Preview: Can The Tech Giant Beat Forecasts For 10th Straight Quarter? - Microsoft (NASDAQ:MSFT)

Microsoft Corporation MSFT is expected to highlight growth from AI and cloud services when the technology giant reports its fourth-quarter financial results on Wednesday after the market close. Here are the earnings estimates, what experts are saying, and key items to watch. Earnings Estimates: Analysts expect Microsoft to report fourth-quarter revenue of $73.8 billion. That's up from $64.7 billion in last year's fourth quarter, according to data from Benzinga Pro. The company has beaten analyst estimates for revenue in nine straight quarters. Analysts expect Microsoft to report fourth-quarter earnings per share of $3.37, up from $2.95 in last year's fourth quarter. The company has beaten analyst estimates for earnings per share in 11 straight quarters. Read Also: $19.5 Trillion Earnings Blitz: Wall Street Faces Make-Or-Break 72 Hours What Experts Are Saying: Microsoft has been a standout tech stock in 2025. Its shares are up 22% year-to-date and trading at all-time highs, as highlighted by Freedom Capital Markets Chief Global Strategist Jay Woods. "The question is -- can they keep the momentum going?" Woods asks in a weekly newsletter. Woods expects investors to ask how Microsoft is integrating its AI spending into products and whether it's boosting revenue. Another key focus is Microsoft's cloud services performance, Woods says, noting how Azure will "bolster" cloud operations. Wedbush analyst Dan Ives reiterated an Outperform rating and $600 price target ahead of Microsoft's quarterly results. "We expect more good news next week from Redmond as Nadella & Co. will deliver another robust quarter driven by the AI Revolution," Ives said in a recent analyst note. Ives said Microsoft is "firing on all cylinders" ahead of the earnings report. In his latest note, Ives said the $600 price target could be "conservative." Microsoft will be the next company to join the $4 trillion market capitalization club this summer and possibly hit $5 trillion in the next 18 months, he predicts. Here are some other recent analyst ratings on Microsoft and their price targets: Raymond James: Maintained Outperform rating, raised price target from $490 to $570 Stifel: Maintained Buy rating, raised price target from $500 to $550 Evercore ISI Group: Maintained Outperform rating, raised price target from $515 to $545 Loop Capital: Maintained Buy rating, raised price target from $550 to $600 UBS: Maintained Buy rating, raised price target from $500 to $600 Key Items to Watch: Microsoft's earnings report comes as the company is investigating whether a leak from its early alert system for cybersecurity companies may have contributed to hackers being able to exploit flaws in the SharePoint service. The company may provide an update on the cybersecurity item and the potential financial ramifications of the hack. Investors and analysts will likely center on AI and cloud when Microsoft reports results and management share commentary on the results and future guidance. Microsoft saw growth across its main segments in the third quarter with Intelligent Cloud revenue up 21% year-over-year, the most of any main segment. Overall cloud revenue is up 20% year-over-year. "Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth," Microsoft CEO Satya Nadella said at the time. "From AI infra and platforms to apps, we are innovating across the stack to deliver for our customers." Microsoft's earnings report could have a huge impact on some of the largest stock market indexes and ETFs. The stock is a member of the S&P 500, Dow Jones Industrial Average and Magnificent 7. With its high stock price, Microsoft is the second largest weighting (7.0%) in the SPDR Dow Jones Industrial Average ETF DIA, which tracks the price-weighted Dow Jones Industrial Average. Microsoft is also the second-largest holding in the SPDR S&P 500 ETF Trust SPY, which tracks the S&P 500 at 7.0% of assets. In the Roundhill Magnificent Seven ETF MAGS, Microsoft is the fifth-largest holding at 13.9% of assets. Microsoft is one of several Magnificent 7 stocks that will report during the week and could be one of the most important stocks given its prominence in these key indexes along with its presence among key growth sectors like AI and cloud. MSFT Price Action: Microsoft stock is up 0.3% to $514.04 on Tuesday versus a 52-week trading range of $344.79 to $518.29. Microsoft stock is up 22.8% year-to-date, outperforming the S&P 500 (+8.8%) and Dow Jones Industrial Average (+5.3%). Read Next: Trump Wants Babies To Get $1,000 To Invest At Birth: This Magnificent 7 Stock Tops Poll For 18-Year Growth Image: Shutterstock MSFTMicrosoft Corp$513.030.10%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum76.79Growth50.87Quality41.13Value13.19Price TrendShortMediumLongOverviewDIASPDR Dow Jones Industrial Average ETF$446.96-0.31%MAGSRoundhill Magnificent Seven ETF$57.99-0.36%SPYSPDR S&P 500$636.03-0.14%Market News and Data brought to you by Benzinga APIs

Microsoft Q4 Earnings Highlights: Double Beat, CEO Says 'Cloud And AI Is The Driving Force' - Microsoft (NASDAQ:MSFT)

Technology giant Microsoft Corporation MSFT reported fourth-quarter financial results after market close Wednesday. Here are the key highlights. What Happened: Microsoft reported fourth-quarter revenue of $76.44 billion, up 17% year-over-year. The revenue total beat a Street consensus estimate of $73.80 billion according to data from Benzinga Pro. The company reported fourth-quarter earnings per share of $3.65, beating a Street consensus estimate of $3.37. Here's a look at Microsoft's revenue by reporting segment: Productivity and Business Processes: $33.1 billion, +16% year-over-year Intelligent Cloud: $29.9 billion, +26% year-over-year More Personal Computing: $13.5 billion, +9% year-over-year The company reported that Microsoft 365 Commercial cloud revenue increased by 18% year-over-year. Microsoft 365 Consumer cloud revenue was up 20% year-over-year in the quarter. Within the Intelligent Cloud segment, revenue from Azure and other cloud services increased by 39% year-over-year. Xbox content and services revenue was up 13% year-over-year in the quarter. Overall cloud revenue was $46.7 billion in the quarter, representing a 27% year-over-year increase across various segments. The company's full fiscal year revenue was $281.7 billion, up 15% year-over-year. Full-year earnings per share were $13.64, up 16% year-over-year. "Cloud and AI is the driving force of the business transformation across every industry and sector," Microsoft CEO Satya Nadella said. "We're innovating across the tech stack to help customers adapt and grow in this new era." Nadella said Azure surpassed the $75 billion revenue milestone for the full fiscal year, representing a 34% year-over-year increase. The company will provide an update on guidance during its earnings call, which can be viewed below. MSFT Price Action: Microsoft stock is up 7.2% to $550.01 in after-hours trading versus a 52-week trading range of $344.79 to $518.29. Read Next: Satya Nadella Touts Copilot Mode In Edge, Can Microsoft Finally Leverage AI To Snag Browser Dominance From Google Chrome? Photo: Shutterstock MSFTMicrosoft Corp$545.716.47%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum76.71Growth51.21Quality41.21Value12.96Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Microsoft Stock Has Upside After 'Eye Popping Cloud And AI Strength' In Q4 - Microsoft (NASDAQ:MSFT)

Microsoft Corporation MSFT analysts weigh in on the company's strong cloud growth shown in the company's fourth-quarter financial results. Here's what analysts are saying about the results and what's next for Microsoft. Wedbush analyst Dan Ives maintained an Outperform rating on Microsoft and raised the price target from $600 to $625. Cantor Fitzgerald analyst Thomas Blakey reiterated an Overweight rating and raised the price target from $581 to $639. KeyBanc analyst Jackson Ader upgraded the stock from Sector Weight to Overweight with a price target of $630. WestPark Capital analyst Curtis Shauger reiterated a Hold rating with no price target. Bank of America analyst Brad Sills reiterated a Buy rating and raised the price target from $585 to $640. Read Also: Jim Cramer Says Zuckerberg And Nadella Are Smarter Than His Once Admired Goldman Sachs -- 'My Head Is Spinning' After Meta, Microsoft Earnings Wedbush: Ives praised Microsoft for its "eye-popping cloud and AI strength in the [fourth quarter]." "Microsoft delivered strong 4Q25 results with strong guidance to start the year as the company's 'shining moment' is now underway with AI already changing the growth trajectory of MSFT's cloud growth story," Ives said. Microsoft's launch of Azure AI Foundry, the analyst explained, is critical for customers. It's also seeing strong usage across Fortune 500 companies. The company provided strong guidance, and fiscal 2026 could be the "true inflection year" of AI growth, he added. "We believe Microsoft is just hitting its next phase of monetization on the AI front." Cantor Fitzgerald: Demand outstripped supply for Microsoft's cloud services in the fourth quarter, Blakey said in a new investor note. "Strength in Azure was driven by Microsoft's largest customers' core infrastructure business as new cloud and AI workloads are built and scale across services," Blakey said. The analyst said Microsoft's strength was likely related to AI with Azure AI contribution increasing in the future. The company's infrastructure offerings impressed analysts, considering 80% of Fortune 500 customers are using them. Microsoft remains "well-positioned to leverage its capex over the long term," Blakey added. Its full stack of applications, infrastructure services, security offerings, and open APIs will continue to serve customers "on their AI journey." KeyBanc: Ader said the Sector Weigh rating for Microsoft was "terribly timed" and "short-lived" with an upgrade back to Overweight. "The company has effectively reduced the argument for neutrality to 'the stock has really run' and bolstered the argument for positivity on almost every front," Ader said. The analyst said "Azure growth" could solve all problems, including higher capex. Azure had between $500 million to $700 million of upside to guidance in the last two quarters, Ader noted. Ader does not expect much debate regarding the costs of supporting the Azure business. He also noted that no macroeconomic headwinds were mentioned on the call. "Amazingly, Azure is still experiencing capacity constraints, and demand continues to outstrip supply, which means there is potential for upside as this unlocks." WestPark: Azure helped accelerate revenue throughout the quarter, Shauger said in a new investor note. Shauger stated that the Hold rating is assigned to Microsoft stock, which has a balanced risk-reward profile for the next 12 months. Cloud, AI and Azure growth shows across all the company's segments, Shauger added, noting how revenue growth was better than expected. Bank of America: A strong Q4 with AI and cloud tailwinds makes the stock a top pick, Sills said. "Microsoft reported another robust quarter, with broad strength across the two key growth franchises, Azure and Office," Sills said. The analyst noted that Microsoft demonstrated "particular strength" in cloud migration deals for its large enterprise segment. "Q4 results validate our view that Microsoft is an AI beneficiary in both applications and infrastructure." Price Action: Microsoft stock is up 4.4% to $535.56 on Thursday versus a 52-week trading range of $344.79 to $555.45. Microsoft stock is up 28% year-to-date in 2025. Read Next: Microsoft Is Paying Up To $2.4 Million For Top Tech Talent -- Leaked Docs Show Amid AI Talent Arms Race Image: Shutterstock MSFTMicrosoft Corp$536.084.45%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum79.05Growth51.45Quality41.28Value14.09Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Microsoft Cloud and AI Revenue Soar | The Motley Fool

Microsoft(MSFT -1.25%) reported fourth-quarter fiscal 2025 earnings on July 29, 2025, delivering $76.4 billion in revenue, up 18% year-over-year in constant currency, and $3.65 in earnings per share, up 22% year over year, both in constant currency. Strong results were driven by 25% year-over-year growth in Microsoft Cloud revenue (in constant currency), $75 billion in Azure annual revenue, up 34% year-over-year for fiscal 2025 (period ended June 30, 2025), record commercial bookings exceeding $100 billion, up 30% year-over-year for fiscal 2025, and expanding adoption of AI and Copilot products across enterprise and consumer segments. This summary highlights strategic milestones in cloud, AI monetization, and capital allocation that are crucial for long-term investors. Microsoft Cloud's annual revenue reached $168 billion, up 23% year-over-year, while Azure expanded global infrastructure to more than 400 data centers across 70 regions. Azure's buildout included more than two gigawatts of new data center capacity, and the company led in liquid cooling capabilities for AI-first workloads. "Azure surpassed $75 billion in annual revenue, up 34% driven by growth across all workloads. We continue to lead the AI infrastructure wave and took share every quarter this year. We opened new data centers across six continents and now have over 400 data centers across 70 regions, more than any other cloud provider. There is a lot of talk in the industry about building the first gigawatt and multi-gigawatt data centers. We stood up more than two gigawatts of new capacity over the past twelve months alone, and we continue to scale our own data center capacity faster than any other competitor. Every Azure region is now AI-first. All of our regions can now support liquid cooling, increasing the fungibility and the flexibility of our fleet. And we are driving and riding a set of compounding S-curves across silicon systems and models to continuously improve efficiency and performance for our customers." -- Satya Nadella, Chairman and Chief Executive Officer Microsoft's unmatched expansion of hyperscale infrastructure positions it to capture accelerating enterprise and cloud-native migration while securing early leadership in AI-enabled workloads, underpinned by significant cost and efficiency improvements that support long-term margin durability. Paid commercial seats for Microsoft 365 rose 6% year-over-year, GitHub Copilot Enterprise customers increased 75% quarter-over-quarter, and Microsoft's Copilot apps have surpassed 100 million monthly active users, reflecting rapid adoption. Foundry is already used by 80% of the Fortune 500, and Foundry is now used by 14,000 customers to build agents, highlighting cross-industry traction. "Our family of Copilot apps has surpassed 100 million monthly active users across commercial and consumer. And when you take a broader look at the engagement of AI features across our products, we have over 800 million monthly active users. Microsoft 365 Copilot is becoming the new way to organize, work, and workflow and work artifacts. We rolled out our biggest update to Microsoft 365 Copilot to date this quarter, bringing together chat, search, create notebooks, as well as agents into one intuitive scaffolding. With this innovation and continued product improvements, we are seeing real momentum. Customers continue to adopt Copilot at a faster rate than any other new Microsoft 365 suite with strong usage intensity as shown by our week-over-week retention. And we saw the largest quarter of seat ads since launch with a record number of customers returning to buy more seats." -- Satya Nadella, Chairman and Chief Executive Officer Microsoft's success in embedding and monetizing AI -- spanning Copilot, Foundry, Fabric, and GitHub -- broadens the recurring revenue base and sets the stage for future pricing power and upsell opportunities within both enterprise and consumer cloud ecosystems. Commercial remaining performance obligation (RPO) climbed to $368 billion, up 35% year-over-year, with 35% of commercial remaining performance obligation recognized as revenue within 12 months, up 21% year-over-year. The company achieved a 45% operating margin (up two percentage points year-over-year) for the full fiscal year despite higher capital expenditures, demonstrating operational leverage. Management guided to capital expenditure moderation in fiscal 2026 (period ending June 30, 2026) with a higher mix of short-lived assets, projecting stable operating margins amid ongoing capacity investments in fiscal 2026 and cloud demand outstripping supply. "We have $368 billion of contracted backlog we need to deliver, not just across Azure, but across the breadth of the Microsoft Cloud. So in terms of feeling good, about the ROI and the growth rates and the correlation I feel very good that the spend that we're making is correlated to basically contracted on the books business. That we need to deliver and we need the teams to execute at their very best to get the capacity in place. As quickly and effectively as they can. And so when you look we've talked about the growth rate declining year over year (as discussed on the Q4 FY2025 earnings call; Microsoft reports on a fiscal year basis). But at its core, our investments, particularly in short-lived assets, like servers, GPUs, CPUs, networking storage, is just really correlated to the backlog we see and the curve of demand." -- Amy Hood, Chief Financial Officer Microsoft's robust contractual backlog provides clear forward revenue visibility, validating the prudence of elevated capital expenditures and reducing the risk of overbuild while supporting capital allocation that maximizes long-term shareholder value. Management expects fiscal 2026 to deliver double-digit revenue and operating income growth, driven by sustained demand for cloud and AI offerings and underpinned by a contracted RPO of $368 billion. Capital expenditures for the first quarter of fiscal 2026 are projected to exceed $30 billion, reflecting continued capacity buildout to meet demand, with Azure revenue growth forecast at approximately 37% year-over-year in constant currency for the first quarter of fiscal 2026. Operating margins are expected to remain stable year-over-year for fiscal 2026, and the effective tax rate is expected to rise to 19%-20% for fiscal 2026.

Microsoft Sees Cloud Growth Accelerate | The Motley Fool

Microsoft easily topped expectations in its fiscal fourth quarter, reporting revenue up 18% and earnings per share up 24% year over year. Intelligent Cloud continued to lead the way, up 26% from a year ago, helping to fuel a 15% boost in net cash from operations to $42.6 billion. Gross margin for the quarter came in at 69%. The company also provided a revenue number for its Azure cloud business for the first time, saying that the service surpassed $75 billion in sales for the entire fiscal year. That's up 34% from fiscal 2024. "Cloud and AI is the driving force of business transformation across every industry and sector," CEO Satya Nadella said in a statement. Intelligent Cloud was the standout, but Microsoft saw growth across its different sectors. Productivity and business processes revenue was up 16% thanks to Microsoft 365 commercial and consumer products, while More Personal Computing jumped by 9% in part thanks to 13% Xbox content and services growth. For the full fiscal year, Microsoft grew revenue by 15% and operating income by 17%. During the quarter, Microsoft returned $9.4 billion to shareholders in the form of dividends and share repurchases. The company ended the period with $94.6 billion in cash and short-term investments on its balance sheet. Investors were apparently cheering the results. Microsoft shares jumped 6% in after-market trading following the earnings release but ahead of the company's call with shareholders. It is the start of a new fiscal year for Microsoft, and investors will be eager to hear forecasts about whether this growth rate can continue into fiscal 2026. Of particular interest will be any guidance on capex spending in the new year as Microsoft continues to invest in AI and data centers. Microsoft has a well-diversified business with exposure to both the consumer and commercial customers and both large AI models and personal computer growth. While some of those businesses are vulnerable to economic headwinds and the threats of tariffs, the overall strength of the portfolio was evident in these results. Microsoft and its big-tech rivals are in the early stages of turning their massive investments in cloud and AI into profits, but the results and new details of Azure are a big step in justifying that outsized expenditure. Investors are understandably excited about the company's potential to continue to convert that potential into profits.

Microsoft (MSFT) Q4 EPS Jumps 24% | The Motley Fool

Microsoft (MSFT 4.35%), a global leader in software, cloud services, and artificial intelligence (AI), posted fiscal 2025 fourth-quarter earnings on Wednesday, July 30, that topped analysts' consensus expectations. Earnings per share of $3.65 and revenue of $76.4 billion beat analyst estimates of $3.37 and $73.9 billion, respectively. Operating income and net income also rose over 20% year over year, highlighted by outsized expansion in AI and cloud services that was accompanied by substantial capital investment to maintain the company's competitive edge. Source: Microsoft. Note: Analysts' consensus estimates for the quarter provided by FactSet. Microsoft operates at the intersection of productivity software, cloud infrastructure, AI, gaming, and business solutions. It sells everything from Windows operating systems for personal computers and Xbox gaming consoles to large-scale cloud computing via its Azure division, and productivity solutions such as Microsoft 365 and LinkedIn. The company also offers developer tools that support software creators and machine-learning professionals. Recently, Microsoft has sharpened its focus on cloud computing and artificial intelligence. Azure, its cloud platform, now underpins core business growth. The integration of AI throughout its services -- spanning from developer tools to workplace productivity software -- has become a driving force. Key success factors include maintaining cloud leadership, accelerating AI adoption, and delivering product innovation at scale while managing heavy investment in data center expansion and sustainable technologies. In the quarter, Microsoft recorded sharply higher revenue and profit, propelled by robust demand for its Azure cloud platform and AI-related services. Azure's annual revenue surpassed $75 billion in FY2025, with quarterly segment revenue in Intelligent Cloud increasing 26% compared to the prior-year period. Azure and other cloud services grew 39% compared to the prior-year period. Microsoft Cloud revenue also climbed 27% compared to the prior-year period. The company processed over 100 trillion tokens in AI workloads in Q3 FY2025. Financial leverage continued to improve as the company enjoyed better margins in AI businesses than during its earlier transition to the cloud. Operating income (GAAP) increased by 23% to $34.3 billion in Q4 FY2025, and net income rose 24% to $27.2 billion compared to the prior-year period. In the conference call, management noted "accelerating demand, with customers in every industry expanding their footprints on Azure." However, the company also reported that property and equipment additions for FY2025 were $64.6 billion, a 45% increase compared to FY2024. Product and segment performance were broadly positive. Productivity and Business Processes revenue, which includes Office 365 cloud offerings, grew 16% to $33.1 billion (GAAP) in Q4 FY2025. Microsoft 365 commercial and consumer products and cloud services both saw double-digit growth in Q4 FY2025, with Dynamics cloud applications revenue increasing 18% compared to the prior-year period. LinkedIn revenue, which is part of the same segment, increased 9% in Q4 FY2025 but continued to be affected by weakness in hiring markets. In Intelligent Cloud, Server products and cloud services revenue grew 27% in Q4 FY2025. The More Personal Computing segment (including Windows, Devices, and Xbox) posted 9% GAAP growth in Q4 FY2025, with Windows devices revenue increased 3% compared to the prior-year period, Xbox content and services revenue increased 13% compared to the prior-year period, and search and news advertising revenue increased 21% compared to the prior-year period. The company delivered hundreds of product releases, services, and enhancements across product categories. These innovations are part of its strategy to stay ahead of rivals in both cloud and AI. Management cited the scale of integrated AI and a superior security posture as current differentiators. The company also referenced record research and development spending in Q4 FY2025 (GAAP), totaling $8.83 billion -- up 9.6% from last year -- as it works to keep pace with evolving technology and customer needs. The company distributed $9.4 billion in dividends and share repurchases in Q4 FY2025. For future periods, management did not provide numerical guidance in the earnings release. However, it stated that high levels of capital expenditures will continue into fiscal 2026, though at a slower growth rate than in fiscal 2025, and with spending focused on assets that return more direct revenue benefit. The company expects ongoing customer demand for cloud and AI, but also noted that "AI capacity constraints beyond June" could limit near-term supply relative to demand. Key operational themes for upcoming quarters include sustaining leadership in cloud and AI, prudent capital allocation for infrastructure investment, and driving efficiency gains as the company builds out data centers worldwide. Microsoft's commitment to environmental and sustainability goals will face greater scrutiny in light of the company's expanding use of resources for AI workloads and global data center scale. No guidance was offered on future dividend changes.

Microsoft Stock Jumps on AI, Cloud Strength in Latest Quarter

Shares in software giant Microsoft jumped on Wednesday after the release of fourth quarter earnings underpinned by growth in cloud computer and artificial intelligence applications. Microsoft is a major investor in the generative AI giant and ChatGPT creator OpenAI. The tech giant saw Intelligent its Cloud segment revenue, which included for the first time revenue in dollar terms from Microsoft's Azure business, or its public cloud computing platform, come to $29.87 billion, up 22 percent from the $23.78 billion the company posted in the year-earlier period. Previously, Microsoft reported growth in its Intelligent Cloud business only in percentage terms. Azure markets computing power and other services and faces stiff competition from market leader Amazon Web Services. Shares in Microsoft jumped by $37.76, or 7.3 percent, to $551 in after-hour trading on Wednesday. Microsoft CEO Satya Nadella in a post-market analyst call said cloud computing and AI represented key growth drivers for his company. "We are building the most comprehensive suite of AI products and tech stack at a massive scale," Nadella said in prepared remarks. "Every Azure region is now AI first," he added of giant data centers Microsoft is building to meet increased demand companies and consumers for AI services. That's as investors look for a return from the software giant on heavy and continuing investments in AI products and data centers. "We are going through a generational tech shift with AI and I have never been more confident in Microsoft's opportunity to drive long term growth and define what the future looks like with that," Nadella argued. The Microsoft boss also talked up his company's gaming business, which has 500 million monthly active users across platforms and devices. "We are now the top publisher on both Xbox and Playstation," he told analysts. Overall Microsoft revenue was up 18 percent to $76.4 billion, which beat a Bloomberg analyst consensus estimate of $73.89 billion. And net income rose 24 percent to $27.2 billion.

Microsoft Rides 'AI Infrastructure Wave' as Cloud Services Demand Jumps | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. Enterprises accelerating their cloud migration as well as increased AI usage across Microsoft's cloud stack boosted the quarter. Nearly all of the company's business units grew revenue by double-digits. Shares of Microsoft soared by 7.65% to $552.50 in after-hours trading. "It was a very strong close to what was a record fiscal year for us," said Microsoft CEO Satya Nadella, during a conference call with analysts, many of whom began their questions with congratulatory greetings. Morgan Stanley analysts believe Azure growth will continue to stay robust. In a recent research note shared with PYMNTS, the analysts cited their 2025 CIO survey showing that Azure was the preferred public cloud vendor -- and it is expected to stay on top over the next three years. The CIOs said 52% of their application workloads are in Azure and they are expected to stay put over the next three years as cloud adoption continues to grow, according to the survey. "Azure AI remains a key priority with 57% of CIOs expecting to use Azure OpenAI Services and 31% of CIOs also expecting to use GitHub Copilot over the next 12 months," according to Morgan Stanley. "These trends point to further consolidation of cloud workloads on Azure over the near and medium term." Despite its robust growth potential, Microsoft shares are trading at "only" around 29 times its earnings per share on a GAAP basis, the analysts said, calling the company a "Gen AI winner." Read more: Microsoft Seeks to Extend Access to OpenAI Technology During the fiscal year, which ended on June 30, Microsoft said it opened new data centers across six continents and now has more than 400 facilities in 70 regions. That's "more than any other cloud provider," Nadella said, adding, "We continue to scale our own data center capacity faster than any other competitor." Microsoft also introduced its "sovereign" cloud service in the quarter, in which any data storage and processing stays within a country's borders. Nadella said Microsoft will bring Copilot Vision to Windows 11 PCs, where users can share their screens and get real-time insights and assistance. The company is ending support for Windows 10 in October. In the fourth quarter, Microsoft reported net income of $27.2 billion, or $3.65 per share, an increase of 24% compared with $22 billion, or $2.95 per share in the same quarter a year ago. Revenue came to $76.4 billion, up 18% from $64.7 billion year over year. The software giant beat Wall Street analysts' consensus expectations, which were $73.8 billion in revenue and earnings of $3.38 per share, for the quarter, according to S&P Global Market Intelligence. Nadella highlighted the continued expansion of AI services as a growth engine for Azure, citing deployments such as Nasdaq's use of Azure AI Foundry agents and OpenAI's reliance on Azure Cosmos DB and PostgreSQL. Azure AI Foundry, launched this year, now supports 50 OpenAI models and more than 14,000 customers using it to build agents. Productivity and business processes revenue rose 16% to $33.1 billion, with Microsoft 365 Commercial cloud revenue up 18%. Microsoft added a record number of new Copilot customers during the quarter, including Barclays, UBS and Wells Fargo, each buying tens of thousands of seats. "Our family of Copilot apps has surpassed 100 million monthly active users across commercial and consumer" markets, Nadella said. "When you take a broader look at the engagement of AI features across our products, we have over 800 million monthly active users." Gaming revenue increased 10% in the quarter, with Xbox content and services up 13%, helped by first-party titles and record usage of Minecraft. For the full fiscal year, Microsoft reported revenue of $281.7 billion, up 15%. Net income was $101.8 billion. Earnings per share for the year was $13.64, a 16% increase. Looking ahead, Microsoft expects continued double-digit growth in revenue and operating income in fiscal 2026, supported by strong demand for cloud and AI. Capital expenditures are projected to exceed $30 billion in the first quarter to meet rising infrastructure needs. Read more: Microsoft Adds AI-Powered Copilot Mode to Edge Browser Microsoft Lays Off Staff as Savings From AI Top $500 Million

Microsoft Earnings Preview: Short-Term Costs Could Fuel Long-Term AI Domination | Investing.com UK

Microsoft (NASDAQ:MSFT) continues to demonstrate strong financial health and strategic prowess in the rapidly evolving technology landscape. With 14.13% revenue growth over the past twelve months and a solid 69.07% gross profit margin. Its Azure cloud platform remains a key growth driver, recording a 35% year-over-year increase in constant currency, supported by significant partnerships with industry leaders like OpenAI. As Microsoft projects up to $45 billion in AI-driven revenue by 2026, fueled by innovations such as Microsoft 365 Copilot, the company positions itself at the forefront of the AI revolution. However, challenges, including sales execution issues and a substantial $80 billion Capex plan, highlight the need for strategic focus as it navigates toward long-term dominance. Put/Call ratio suggests the following three scenarios: **** Be sure to check out InvestingPro to stay in sync with the market trend and what it means for your trading. For under $9 a month amid the summer sale, you could unlock access to market-beating features like the following: Ali Merchant is a seasoned financial market professional with expertise in Technical Analysis, Treasury & Capital Markets, Trading, Sales, Research, Training, Fund & Relationship Management, Fintech, and Digitalization. He is a CMT charter holder and an active member of CMT Association, USA, American Association of Professional Technical Analysts, and CMT Association of Canada. He has worked on various roles and organizations in North America and the GCC, such as ABN Amro bank, Thomson Reuters, Refinitiv, MAK Allen & Day Capital Partners (WA:CPAP), and Bridge Information Systems. He is the founder of TwT Learnings, provides financial market training. https://www.investing.com/members/contributors/263388641/opinion

Microsoft tops quarterly revenue estimates on strong Azure demand

(Reuters) -Microsoft surpassed Wall Street estimates for quarterly revenue on Wednesday as strong demand from businesses for artificial intelligence tools drove steady growth in its Azure cloud-computing unit. Total revenue rose 18% to $76.4 billion in the April-June period, the company's fiscal fourth quarter. Analysts on average expected $73.81 billion, according to data compiled by LSEG. Azure revenue rose 39%, compared with Visible Alpha estimates of 34.75%. Shares of the company jumped more than 6% in extended trading. Microsoft, the No. 2 cloud provider, said its Azure unit surpassed $75 billion in full-year revenue, disclosing Azure sales in dollars for the first time. That compares with Visible Alpha estimates of $74.62 billion, and cloud leader Amazon Web Services' 2024 revenue of $107.56 billion. Big Tech is under pressure to deliver stronger returns on the hundreds of billions of dollars it has poured into artificial intelligence, with analysts estimating more than $330 billion will be spent this year, largely on data centers. Microsoft shares have gained more than 21% in 2025 on optimism that demand for Azure - crucial for running AI workloads, especially OpenAI's technology - will remain strong. The company has also pushed agentic AI, tech capable of handling routine tasks without human intervention, by launching a clutch of autonomous agents, including one for GitHub Copilot. Last week, Alphabet's Google Cloud beat revenue estimates and lifted full-year capex by $10 billion to $85 billion to support surging demand for its cloud services. But it joined cloud rivals, including Microsoft, in warning that capacity constraints, driven by the limited supply of AI chips, were hampering its ability to capitalize on the demand. Microsoft's lucrative tie-up with OpenAI that gives it exclusive access to the ChatGPT maker's technology is also under scrutiny as the startup shifts some workloads to rivals, including Google and Oracle. Microsoft has tried to reduce its reliance on OpenAI by broadening its model lineup with partners such as xAI, Meta, and France's Mistral, hosting their models on Azure for clients. It also rolled out new features to Copilot in April in a bid to boost adoption, and has moved to shore up the core, non-AI side of Azure after a slowdown earlier this year. (Reporting by Deborah Sophia in Bengaluru; Editing by Anil D'Silva)