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Microsoft surpassed quarterly revenues on Wednesday as its cloud sector reported robust sales growth in response to strong demand from artificial intelligence-related services, easing fears of slowing.
Revenue rose 13% to the quarter from the same period last year to the end of March, up to $700.1 billion. Net profit rose 18% to $25.8 billion. Both numbers exceeded the average estimates from the S&P Visible Alpha study.
Microsoft’s shares jumped 9% in after-hours trading in New York, adding about $260 billion in market value. Stocks have fallen 6% since the end of 2024 as investors weighed the impact of the US president’s tariffs on global supply chains and the US economic growth.
Revenue from cloud computing services has increased by 20% from a year ago to $42.4 billion. The unit housing the Azure Cloud platform had missed expectations last quarter, and the shares were sold.
“The main focus was a big win over Azure growth,” said Raimo Lenschow, analyst at Barclays. “The major improvement in AI’s contributions once shows the high potential of AI [more] Capacity will be available. ”
Microsoft’s capital expenditures — expenditures on equipment and other major investments — ranged from $14 billion in the same period last year to $21.4 billion.
Chief Executive Satya Nadella told investors on Wednesday that she had cancelled her commitment to a new US data center lease. Nadella pointed out that Microsoft opened data centers in 10 countries in the most recent quarter.
Nadella added that it’s about keeping the company from being caught “upside down” by overbuilding buildings in one part of the world as demand increases elsewhere, Nadella said, “I feel it’s very good about the pace of expansion.”
In an interview with the Financial Times this week, Microsoft president Brad Smith pledged to spend “tens of millions of dollars” per year on European data centers to protect access to customer data and computing power. The move aims to reassure the community that Trump cannot block access to critical technologies.
Microsoft’s Chief Financial Officer Amy Hood repeated its forecast for CAPEX at $800 billion for the full year through June 30th. She said next year will increase at a lower rate than 2025. Hood added that demand in the data center will continue to outperform supply.
Big Tech Peers In the face of investor skepticism and aggravating economic outlook, Google and Meta similarly developed and increased spending plans. On Wednesday, Meta said that he could spend $72 billion this year on $65 billion from previous forecasts as he became an AI leader and infrastructure hardware would become more expensive.
But the evolving relationship between the software giant and startup Openai, which is backed by $13 billion in investment, has raised doubts about whether to pace development.
In January, Microsoft said it would change the structure of its deal with Openai to allow a company led by Sam Altman to use Rivals’ cloud computing services. It retains the right to initial denial.
The move announced that cloud provider Oracle and Japan’s SoftBank would build at least $100 billion in AI infrastructure in the US with a project called Stargate.
Microsoft still holds significant financial benefits to Openai and is in discussions to convert its share of future profits into a fairer way.
