NN Online:
Microsoft revealed on Wednesday that its Azure cloud computing platform generated over $75 billion in annual revenue, marking a 34% year-over-year increase. This is the first time the tech giant has publicly disclosed Azure’s revenue, highlighting its central role in Microsoft’s shift toward artificial intelligence.
The announcement came as part of Microsoft’s end-of-year earnings report, which also showed a strong 24% jump in quarterly profit — surpassing Wall Street expectations and easing investor concerns over the company’s aggressive investments in data centers needed to support cloud and AI services.
“We continue to scale our own data center capacity faster than any other competitor,” CEO Satya Nadella told investors, noting that Microsoft now operates more than 400 data centers across six continents.
In the fiscal fourth quarter (April to June), Microsoft posted a profit of $34.3 billion, or $3.65 per share, exceeding analyst predictions of $3.37 per share. Revenue for the quarter stood at $76.4 billion, up 18% from the same period last year and above the $73.86 billion projected by FactSet analysts.
Though Azure launched over a decade ago, it has become increasingly integral to Microsoft’s AI strategy. The company is working to integrate AI tools, including chatbots, into its core offerings for enterprise customers.
Despite Azure’s impressive growth, it still lags behind Amazon Web Services (AWS), which reported $107.6 billion in revenue for its most recent fiscal year ending in December.
The cost of building and maintaining the infrastructure needed for cloud and AI growth is substantial. In response, Microsoft has sought to cut costs in other areas, including laying off around 15,000 employees this year. Nadella acknowledged the toll of these layoffs but framed them as necessary for reimagining Microsoft’s mission in the AI era.
Interestingly, the company’s overall headcount has remained stable at 228,000 full-time employees as of June 30, the same as the previous year. However, there has been a shift, with more employees now based in the U.S. and fewer working in support or consulting roles.
Investors have responded positively to Microsoft’s more streamlined approach, especially as major tech firms face pressure to justify heavy capital expenditures needed to fuel the AI race.
Microsoft’s CFO, Amy Hood, said capital spending is expected to reach $30 billion in the July-September quarter. By comparison, Google recently announced it would boost its capital expenditure budget by $10 billion, reaching $85 billion.
While Microsoft didn’t provide details on how U.S. tariffs are currently affecting revenue, its annual report highlighted tariffs as one of the risks facing the company. It warned that increasing geopolitical instability and shifting U.S. trade policies are creating uncertainty, potentially affecting the supply chain and cost competitiveness of its cloud and device operations.
Source: AP
