Microsoft has delivered a powerful financial performance for the quarter, posting $70.1 billion in revenue a 13% year-on-year increase driven by surging demand in cloud computing and artificial intelligence.
The Redmond-based tech giant also saw net profits jump 18% to $25.8 billion, solidly beating Wall Street estimates and pushing its stock up over 8% in after-hours trading.
The company’s cloud segment was the standout performer, with Microsoft Cloud revenue reaching $42.4 billion, up 20% compared to the same period last year. Chief Financial Officer Amy Hood credited the growth to “continued demand for our differentiated offerings.”
“From Azure to AI, the momentum is real,” said CEO Satya Nadella, who highlighted the company’s ongoing transformation into a central force in enterprise AI. “We’re investing aggressively but strategically to meet the evolving needs of our customers.”
A key highlight was the 33% growth in Azure and other cloud services, underscoring Microsoft’s dominance in enterprise cloud infrastructure. The Intelligent Cloud segment alone pulled in $26.8 billion, up 21%.
The Productivity and Business Processes division which includes Office 365, Dynamics, and LinkedIn also posted strong performance, with $29.9 billion in revenue, marking a 10% increase.
Microsoft’s bold early investments in AI continue to pay off. The company has invested heavily in infrastructure to support generative AI, particularly through its partnership with OpenAI. However, this quarter marked a shift: Microsoft announced that OpenAI will no longer rely exclusively on Microsoft for its compute needs, signaling a new phase in their collaboration.
Nadella acknowledged the challenge of scaling AI infrastructure, especially in securing adequate energy resources to power AI data centers. He said the company is “very focused” on optimizing its energy strategy as demand surges.
In January, Microsoft said it was on pace to invest nearly $80 billion this fiscal year in capital expenditures and infrastructure much of it tied to AI development and deployment.
Despite ongoing concerns around global trade policy and tariffs, the company reassured investors with a confident outlook for the next quarter. Microsoft has been more reserved than peers in its political engagements, but appears well-positioned to weather policy headwinds.
As part of its shareholder return strategy, Microsoft repurchased shares and paid dividends totaling $9.7 billion during the quarter.
“This was a strong, steady quarter from a company that’s matured into its AI moment,” said Jeremy Goldman of Emarketer. “In a space flooded with promise, Microsoft stands out for actually delivering results.”
