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