Microsoft shares rise as Azure cloud growth drives strong quarterly results

UPDATE - follow-up to Microsoft stock jumps 4% as cloud growth drives earnings and revenue beat: Microsoft shares rose 4% in extended trading after reporting better-than-expected quarterly results, driven by 48% growth in its Azure cloud infrastructure business. Revenue grew 19% year over year in the quarter, with Azure now its biggest single business and generating $33.17 billion in revenue.

Capital And Infrastructure

Microsoft reported $45.2 billion worth of capital expenditures and finance leases during the quarter. Around 75% of capital expenditures are now tied to short-lived assets such as Intel chips and Nvidia graphics processing units. Free cash flow declined 27% to $18.63 billion, while net income increased to $36.63 billion, or $4.92 per share.

Segments And Cuts

Revenue in the Agents and Infra segment rose almost 25% to $76.8 billion, while the Devices and Consumer business slipped 3% to $15.48 billion. During the period, Microsoft said it would cut 4,800 jobs and later offered buyouts to up to 60,000 employees.

Context

Major technology companies are spending heavily on data centers and specialized hardware to capture rising demand for artificial intelligence services. Managing these massive infrastructure costs while maintaining profit margins remains a central focus for the industry.