Microsoft Shares Rise After Cloud Growth Drives Strong Quarterly Results

Microsoft shares rose 4% in extended trading on Wednesday after the company reported better-than-expected quarterly results. The quarter ended on Sept. 30.

Growth And Revenue

Revenue grew 19% year over year. Azure revenue grew 48%, and Azure is now the company's biggest single business. Microsoft disclosed Azure revenue in dollars for the first time, reaching $33.17 billion in the quarter, which beat the $32.32 billion expected by analysts polled by StreetAccount. Net income increased to $36.63 billion, or $4.92 per share, up from $27.75 billion, or $3.72 per share, a year ago. Adjusted earnings exclude a roughly $200 million impact from its investment in OpenAI.

Segments And Spending

Microsoft reported results under two operating segments called Agents and Infra, and Devices and Consumer. In Agents and Infra, revenue rose almost 25% to $76.8 billion. Revenue in the Devices and Consumer business slipped 3% to $15.48 billion. Sales of devices and Windows licenses declined 22% due to higher memory and storage costs. Microsoft reported $45.2 billion in capital expenditures and finance leases during the quarter, up about 30% from a year earlier. Free cash flow declined 27% to $18.63 billion.

Job Cuts And AI

During the fiscal first quarter, Microsoft said it would cut 4,800 jobs and announced buyouts for up to 60,000 employees. The company also established an AI implementation unit and revealed a Copilot AI super app with coding abilities.

Context

Major technology companies are currently spending heavily on data center infrastructure to meet the rising demand for artificial intelligence services. At the same time, firms like Microsoft are adjusting their workforce numbers and operating costs to balance these massive investments in new technology.