Microsoft tops estimates as Azure growth hits 48%
The move
Microsoft, where Steve Ballmer and Bill Gates remain major shareholders, reported fiscal first-quarter revenue of $92.3 billion on Oct. 28, up 19% from a year earlier and above the roughly $90.7 billion analysts expected. Azure revenue grew 48% to about $33.2 billion, an acceleration from 43% growth the prior quarter, and Microsoft Cloud revenue rose 30% to $63.9 billion. Net income rose 32% to $36.6 billion, or $4.92 a share; excluding the effect of its OpenAI investment, non-GAAP net income rose 18% to $36.4 billion. Capital spending on property and equipment nearly doubled to $39.4 billion, and commercial remaining performance obligation -- contracted future revenue -- rose 73% to $677 billion.
Why it matters
Azure's acceleration shows Microsoft's cloud business is still gaining speed even as the company ramps up AI-related spending.
The bear case
Capex nearly doubling from a year ago means Microsoft needs that growth to keep paying off, and the company has guided to capex topping $50 billion again next quarter.
What to watch
Whether Azure growth reaches the 49% to 50% range Microsoft has guided to for next quarter.