The news: Microsoft shares fell as the tech giant beat revenue expectations and reported record quarterly sales, but capital expenditure came in below analyst estimates.
The company said growth in its Azure cloud business accelerated, offering investors some reassurance that its massive AI bet is beginning to convert into results.
The numbers: Sales reached a record USD82.9 billion ($116.5 billion), up 18%, with net income of USD31.8 billion, both beating Wall Street expectations cited by The Wall Street Journal. Azure cloud revenue grew 40%, accelerating from 39% the prior quarter.
Capital expenditure was USD31.9 billion, below analyst expectations of around USD35 billion cited by Bloomberg.
Shares fell over 2% in after hours trading in New York.
What they said: CEO Satya Nadella said the company’s AI business had surpassed an annual revenue run rate of USD37 billion, more than doubling year on year.
“We are focused on delivering cloud and AI infrastructure and solutions that empower every business to eval-max their outcomes in the agentic computing era,” Nadella said in a statement.
Microsoft has been expanding its AI model options, adding Anthropic’s technology to its cloud and Copilot products, and this week landed its biggest-ever Copilot rollout, covering roughly 743,000 Accenture employees, Reuters noted.
The context: The results came on a bumper night for Big Tech, with Google posting a surge in profit of 81% on the back of a 63% jump in Cloud revenue, Amazon revealing growth at Amazon Web Services that reached 28% and Meta beating revenue expectations.