Record Quarter Driven by Cloud and AI Momentum
Microsoft shares jumped 8% in after-hours trading following a strong earnings report for its fiscal fourth quarter. The tech giant posted earnings per share of $3.65, beating the $3.37 forecast, and revenue of $76.44 billion, surpassing the expected $73.81 billion. This 18% year-over-year revenue increase marks Microsoft’s fastest growth in over three years.
Net income rose to $27.23 billion from $22.04 billion in the same period last year. The stellar results were largely driven by growth in cloud services and the increasing adoption of Microsoft’s AI products across enterprise solutions.
Azure and Cloud Dominate Performance
For the first time, Microsoft disclosed Azure’s revenue, which, along with other cloud services, surpassed $75 billion in fiscal 2025, representing a 34% annual increase. Azure revenue alone grew 39% during the quarter, outperforming analyst estimates.
The Intelligent Cloud division, which includes Azure, generated $29.88 billion in revenue, beating StreetAccount’s $28.92 billion estimate. This unit is now a core driver of Microsoft’s valuation and competitive edge in the AI infrastructure race.
AI-Fueled Software Growth and Strong Productivity Sales
Microsoft’s Productivity and Business Processes segment — which includes Office 365 and LinkedIn — brought in $33.11 billion, also exceeding projections. Microsoft reported that AI-powered features like Microsoft 365 Copilot boosted revenue per user. CEO Satya Nadella noted that Copilot now has 100 million monthly active users across commercial and consumer products.
The More Personal Computing division, including Windows, devices, and gaming, grew to $13.45 billion, surpassing the $12.68 billion estimate. PC demand rebounded slightly, with Gartner reporting a 4.4% increase in shipments during the quarter.
Rising CapEx as Microsoft Expands AI Infrastructure
Microsoft invested heavily in AI infrastructure, spending $24.2 billion on capital expenditures and finance lease assets, a 27% increase. This aligns with broader megacap tech trends: Alphabet recently raised its 2025 capex forecast to $85 billion, while Meta expects up to $72 billion in spending.
Despite laying off over 6,000 employees and recording $1.71 billion in other expenses — including losses related to OpenAI — Microsoft’s share price surged to over $550 after hours. This pushed its market capitalization past $4.1 trillion, making it the second company after Nvidia to cross the $4 trillion threshold.
