Microsoft tops cloud growth estimates, Azure surpasses $100bn annual revenue
Revenue rose 18% to $90bn and Azure grew 43%, beating analyst forecasts and easing some concerns about the $35.8bn in quarterly AI infrastructure spending.
Revenue and Azure growth
Microsoft reported revenue of $90bn for its fiscal fourth quarter ended June, up 18% year on year and ahead of the $86bn consensus estimate. The result was driven by cloud, with the Azure platform growing 43%, compared to the 39.98% projected and up from 40% in the prior quarter. For the full year, Azure revenue crossed $100bn for the first time.
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.
- Actual
- 90 $bn
- Estimate
- 86 $bn
- Actual
- 4.81 $
- Estimate
- 4.24 $
Profit boosted by one-off gain
Net income jumped 31% to $35.8bn, but the figure was inflated by a one-off $3.2bn gain on Microsoft's stake in AI lab Anthropic. Excluding that gain, earnings would have been lower. Per-share earnings of $4.81 still beat the $4.24 analysts had expected, though the company noted that including its stake in OpenAI would have reduced EPS by 7 cents.
Capital spending keeps climbing
Microsoft spent $35.8bn on property and equipment in the quarter (the Financial Times reported $41bn), more than double the $17bn spent a year earlier. For the full calendar year, the company forecasts capital expenditure of $190bn, part of a wider Big Tech spending race that has strained cash flows and pushed the stock down about 18% so far this year.
Backlog and Copilot adoption broaden
The commercial backlog, representing booked but not yet recognised revenue, surged 84% year on year to $678bn. Importantly, the sequential growth came from customers beyond the large AI model developers, easing concern that the backlog is too concentrated around OpenAI. Paid seats for the Microsoft 365 Copilot assistant passed 30 million, up from 20 million in July.
Strategic shift and market reaction
Microsoft is diversifying its AI bets, adding Anthropic's models into its offerings and developing in-house technology, while leaning on business ties such as a deal with Accenture to boost adoption of the $30-a-month Copilot. Among other divisions, LinkedIn revenue rose 12%, while Windows and devices revenue fell 7% and Xbox services and content declined 10%. The shares, down 18% this year, rose 3% in after-hours trading following the release.
