Microsoft revenue rises 19% to $92.3 billion as Azure grows 48% and AI spending climbs

Headline results

Microsoft reported revenue of $92.3 billion for the quarter to 30 September, up 19% from a year earlier and above the $90.6 billion analysts had expected. Net income rose 32% to $36.6 billion according to TechCrunch, the New York Times and the Financial Times, although The Verge gives $33.6 billion for the same measure. Microsoft Cloud brought in $63.9 billion, up 30%. Remaining performance obligations, meaning future revenue already committed under existing contracts, rose 73% to $677 billion. Free cash flow stayed positive despite heavy data-centre spending.

Azure and cloud demand

Azure, which lets businesses rent computing power, storage and AI tools, earned $33.2 billion in the quarter, up 48% from $22.4 billion a year earlier. That beat the $32.3 billion analysts expected and topped the 44% to 45% growth that CFO Amy Hood had forecast on the July earnings call. Microsoft now reports Azure revenue every quarter, which lets investors compare it directly with Amazon Web Services and Google Cloud, whose parent companies already publish cloud sales in dollars. Alphabet put Google Cloud at $30.7 billion in the same quarter, slightly below Azure, though TechCrunch calculates that Google Cloud grew about twice as fast. Microsoft 365 contributed nearly $28 billion and OpenAI accounted for $10 billion of revenue, and not all Azure income is AI-related because enterprises also run traditional software there.

Quarter to September 202522.4

Quarter to September 202633.2

Quarter to September 2025

22.4 $bn

Quarter to September 2026

33.2 $bn

Data from the article text

Segments and devices

Microsoft dropped its three former reporting segments in favour of two new ones, Agents and Infra and Devices and Consumer. Agents and Infra, which includes Azure, Microsoft 365 and server products, brought in $76.8 billion, up 25% and about 83% of total revenue according to The Verge. Devices and Consumer, covering Windows, Xbox, Surface and search and advertising, recorded $15.5 billion, down 3%. Windows OEM and devices revenue fell 22%, which Microsoft linked to the end of Windows 10 support in the prior year, OEM inventory drawdowns and a weaker PC market. Xbox hardware revenue dropped 14% and Xbox content and services, including Game Pass, slipped 2%, while Surface prices have risen during what The Verge calls the RAMageddon crisis.

Spending and workforce

Capital expenditures reached $45.2 billion in the quarter, up about 30% from $34.9 billion a year earlier, and in July the company had told investors to expect more than $50 billion on AI infrastructure. Capex came in below what analysts had expected, according to N-tv.

Quarter to September 202534.9

Quarter to September 202645.2

Quarter to September 2025

34.9 $bn

Quarter to September 2026

45.2 $bn

Data from the article text

On Monday, 26 October, Microsoft offered buyouts to up to 60,000 staff in the United States, Canada, the United Kingdom and India, around a quarter of its roughly 223,000 employees. The company indicated that only a small fraction of those invited would accept. It is the second buyout offer this year, following a voluntary retirement programme for older, longer-serving staff in April. In July, Microsoft removed 20% of its Xbox staff, a share of about 4,800 positions, and shut several game studios.

Market reaction

Shares climbed more than 5% on Wednesday, 28 October, the Financial Times reports, and after hours the stock was up about 4% at $552, roughly 45 minutes after the results. It briefly rose above $560 in extended trading, and if the gains hold on Thursday, 29 October, the shares could pass their record high of just over $555 set in summer 2025. Analyst Jesse Cohen of Investing.com said the figures were close to flawless for a company of Microsoft's size, offsetting worries raised by Alphabet and Meta results that AI infrastructure spending might not pay off. Amazon reports its own quarter on Thursday, 29 October, and analysts expect Amazon Web Services to grow.