Key Takeaways
- Microsoft’s cloud business, Azure, grew faster than expected last quarter, boosting investor confidence.
- The company predicts continued strong Azure growth in the upcoming quarter.
- Artificial intelligence played a significant role, contributing 16 percentage points to Azure’s recent growth.
- Overall profit and revenue topped analyst predictions, pushing Microsoft shares higher after the announcement.
- Microsoft is heavily investing in AI infrastructure, increasing spending on data centers and computer chips.
Microsoft calmed investor nerves with impressive quarterly results, showing stronger-than-expected growth in its Azure cloud computing division.
The company predicts this momentum will continue, forecasting robust Azure growth for the next quarter as well. According to Reuters, this positive outlook helped lift Microsoft’s shares significantly in after-hours trading.
These results, similar to recent positive news from Google, suggest demand for artificial intelligence remains high, easing concerns about a potential slowdown. Some analysts had previously worried about signs like canceled data center leases.
Azure’s revenue jumped 33% in the quarter ending March 31, beating estimates. AI was a key driver, responsible for 16 percentage points of that growth, up from 13 points the previous quarter.
Interestingly, Microsoft’s Chief Financial Officer, Amy Hood, noted that while AI’s contribution met expectations, the non-AI part of the Azure business actually performed better than anticipated.
She explained that the main upside from AI during the quarter came from delivering computing resources to customers earlier than planned.
Microsoft’s overall performance was strong, reporting a profit of $3.46 per share, ahead of the $3.22 expected. Total revenue climbed 13% to $70.1 billion.
The company continues to invest heavily in the future, particularly in AI. Capital expenditures surged 53% to $21.4 billion in the quarter. Officials indicated spending will keep growing, though likely at a slower rate, with a greater focus on acquiring computer chips like CPUs and GPUs crucial for AI.
CEO Satya Nadella addressed analyst scrutiny over data center plans, stating that adjusting these plans is standard practice for Microsoft, even if it’s only recently drawn close attention.
The strong results across the board suggest fears about businesses cutting spending due to potential U.S. tariffs haven’t materialized significantly for Microsoft yet.
