The actions of Microsoft Corp. surged after the company reported its biggest cloud growth in four years, suggesting its AI and computing services are gaining traction with customers.
The income of Azure Cloud increased 43% during the fiscal fourth quarter, the company reported Wednesday in a statement. This was the largest quarterly growth since the beginning of 2022 and exceeded the average estimate of analysts, who were predicting a 40% increase. The income of Azure They surpassed $100 billion for the first time during the fiscal year that ended in June.
The financial director, Amy Hoodsaid it expects the cloud computing unit’s growth to accelerate further in the current quarter, reaching approximately 45%. “Demand continues to exceed available supply,” he declared during a conference call with analysts.
He also indicated that Microsoft It would maintain its policy of not making new capital investments this year, which helped the shares rise nearly 15%, to US$449.83, when markets opened in New York, posting the largest intraday gain in more than six years.
Since he promoted the rise of artificial intelligence together with his partner OpenAI, Microsoft has focused its attention on AI models and software capable of acting autonomously. These products require enormous processing capacity, and the company has joined the intense investment activity in the sector to build new data centers and acquire the chips necessary to manage AI services.
Capital expenditures—a key indicator of data center spending—increased 70% to $41 billion in the quarter. Analysts expected US$42 billion.
Hood He said the company had determined that its data centers and office buildings would likely remain useful for 10 more years, a change that will allow some of the company’s capital expenditures to be allocated to operating costs.
The bottom line: Microsoft’s capital spending is likely to reach
approximately US$175 billion this year, compared to a previous forecast of US$190 billion. But apart from this accounting adjustment, the company’s investment expectations for 2026 “remain unchanged,” he said. Hood.
That could ease investor concerns about the company’s huge outlays on data centers and chips, even as investors continue to question the spending of some of Microsoft’s competitors.
Alphabet Inc.the parent company of Googlelast week raised its spending forecasts, and Meta Platforms Inc. on Wednesday raised the lower bound of its own capital spending forecast. Both companies saw their share prices fall. Amazon.com Inc., which is also investing heavily in data centers, is scheduled to report financial results on Thursday.
The executive director of Microsoft, Satya Nadellastated that the company now has more than 30 million paying users of Microsoft 365 Copilotthe AI assistant sold as an add-on to the popular Office software. This figure represents a considerable increase compared to the approximately 20 million users three months ago.
The increase in paying users of Copilot is a good result, said the analyst of Bloomberg Intelligence, Mandeep Singhin an interview in Bloomberg TV. “Microsoft’s bundling strategy still works.”
Total revenue increased 18% to $90 billion, exceeding average forecasts of $87.7 billion. Earnings per share were US$4.81, compared to a forecast of US$4.25. This includes an increase of 33 cents per share thanks to Microsoft’s investment in the AI lab Anthropic PBC.
