Microsoft posts strongest cloud growth in four years as Azure revenue jumps 43%, shares surge
The software giant's cloud platform Azure grew 43% in the fiscal fourth quarter, its fastest pace since 2022, while CFO Amy Hood signalled a moderation in AI infrastructure spending. Shares rose more than 7% in after-hours trading.
Microsoft reported fiscal fourth-quarter results on Wednesday that showed its Azure cloud platform growing at the fastest pace in four years, while the company signalled it would rein in the breakneck pace of AI infrastructure spending that has rattled investors across the tech sector.
Cloud acceleration
Azure revenue expanded 43% in the quarter ended June, handily outpacing the roughly 40% analysts had expected. It was the strongest quarterly growth for the cloud unit since 2022. CEO Satya Nadella said Azure revenue crossed the $100 billion mark for the first time this year.
In this year, Azure revenue crossed the $100 billion mark for the first time.
- Actual Q4 2026
- 43 %
- Analyst estimate
- 40 %
Total company revenue for the quarter rose 18% to $90 billion, while operating profit also climbed 18% to $40.6 billion. Intelligent Cloud, the segment that includes Azure, now accounts for more than 40% of Microsoft's total sales.
AI spending discipline
Capital expenditures jumped 70% to $41 billion in the quarter, but CFO Amy Hood told analysts the full-year investment figure would land around $175 billion, down from a previously indicated range of up to $190 billion. The moderation contrasts with rivals such as Alphabet, Meta and Amazon, which continue to ramp up their AI infrastructure budgets.
- Previous outlook
- 190 $ billion
- Revised outlook
- 175 $ billion
Investors have grown wary of ballooning capex across the tech industry. Alphabet's stock fell last week after the company raised its annual investment forecast to between $195 billion and $205 billion. Microsoft's signal of restraint was taken as a positive.
Copilot adoption
Microsoft's AI assistant Copilot now has more than 30 million paying users, Nadella said, up from about 20 million three months earlier. The rapid uptake suggests the company's push to embed generative AI across its Office suite is gaining traction with enterprise customers.
Financial snapshot
For the full fiscal year ended June, Microsoft's revenue increased 18% to $332 billion (€290 billion). Net profit surged nearly a third to almost $134 billion. The results underscore how the company's cloud and AI bets are translating into bottom-line growth even as it spends heavily on data centres.
Market reaction
Shares climbed between 3% and more than 7% in after-hours trading on Wednesday, with different outlets reporting varying gains during the session. The stock move reflected relief that cloud growth is accelerating while spending plans are being tempered.
This earnings season is about the implementation of AI, not the enthusiasm for AI.
Seth Hickle, chief investor at wealth manager Mindset, said the focus has shifted from AI hype to tangible results. Microsoft's numbers provided evidence that its investments are beginning to pay off, even as the broader tech sector faces scrutiny over the returns on massive AI outlays.
