Microsoft reported on Wednesday that its flagship Azure cloud computing platform generated over $75 billion in annual revenue, representing a 34% increase over the previous year.
Microsoft’s efforts to refocus on artificial intelligence are centered on the Azure cloud business, but the company had not revealed its earnings until Wednesday.
The disclosure was made in the software behemoth’s year-end earnings report, which also revealed a 24% increase in quarterly profit that exceeded Wall Street forecasts and appeased investors concerned about Microsoft’s ongoing construction of expensive new data centers required to meet demand for cloud computing and artificial intelligence.
During an investor call, CEO Satya Nadella boasted that the company now has over 400 of the expansive facilities spread across six continents and claimed, “We continue to scale our data center capacity faster than any other competitor.”
Microsoft exceeded analysts’ forecasts of $3.37 per share with a fiscal fourth-quarter profit of $34.3 billion, or $3.65 per share.
In the April–June period, it reported $76.4 billion in revenue, an 18% increase over the previous year.
According to a FactSet Research survey, analysts had been anticipating $73.86 billion in revenue.
Microsoft released Azure over ten years ago, but as the firm seeks to market its AI chatbot and other tools to large commercial clients that also depend on its core online services, the service has become increasingly entwined with its AI goals.
Amazon Web Services, its top rival, announced $107.6 billion in sales for its fiscal year that concluded in December, although it still lags.
Because it is costly to build the infrastructure needed to support cloud and AI technology, Microsoft has sought ways to save costs.
Even though its profits have skyrocketed, it announced layoffs of roughly 15,000 employees this year.
Last week, Nadella told staff that while the layoffs were “weighing heavily” on him, he also saw them as an opportunity to rethink the company’s purpose in the era of artificial intelligence.
However, the total number of employees has remained the same. According to the corporation, as of June 30, it had 228,000 full-time workers, which is the same number that it stated a year earlier.
However, a small percentage of these workers are now based in the United States, and fewer of them work in consulting or product support.
As Microsoft and other tech firms attempt to defend massive capital expenditures to pay for the data centers, semiconductors, and other components needed to run AI technology, Wall Street has embraced promises of a more economical method.
Google announced last week that it would increase its capital expenditure budget by an extra $10 billion to $85 billion following the release of its profits.
Amy Hood, the Chief Financial Officer at Microsoft, stated that she anticipates $30 billion in capital expenditures over the July–September quarter.
Although Microsoft’s annual report identifies tariffs as one of the risks the firm confronts, the company did not reveal on Wednesday how much the sweeping U.S. tariffs are impacting its sales.
“An unpredictable trade landscape is created by increased geopolitical instabilities and shifting U.S. administration priorities,” the business stated.
It added that the “volatility of U.S. tariffs has triggered economic uncertainty and could impact cloud and device supply chain cost competitiveness.”
