‘Every Azure region is now AI-first,’ said Microsoft CEO Satya Nadella
Microsoft delivered profits up 24% year-over-year and revenue of $76.4 billion for the quarter, up 18% from the same time last year, driven on the strength of demand for cloud and AI infrastructure and services.
Microsoft Cloud revenues for the quarter were stronger than expected at $46.7 billion, up 27%.
“Cloud and AI is the driving force of business transformation across every industry and sector,” said Satya Nadella, chairman and CEO of Microsoft.
On the quarterly call with investors, he added: “The rate of innovation and the speed of diffusion is unlike anything we have seen. To that end, we are building the most comprehensive suite of AI products and tech stack at massive scale.”
In terms of infrastructure-specific remarks from the call, Nadella said that Microsoft has opened new data centers on six continents and stood up more than 2 gigawatts of new capacity in the past 12 months. The company now has more than 400 DCs across 70 regions. “We continue to lead the AI infrastructure wave and took share every quarter this year,” he said.
Nadella also said that Microsoft is “[scaling] our own data center capacity faster than any other competitor” and that the infrastructure it is building out is focused on support of AI workloads.
“Every Azure region is now AI-first,” said Nadella.
Microsoft spent $24.2 billion in capital expenditures during the quarter. CFO Amy Hood explained that more than half of that figure was spending on “long-lived assets that will support monetization over the next 15 years and beyond,” with the remaining capex going to servers, CPUs and GPUs. “While we brought additional data center capacity online this quarter, demand remains higher than supply,” Hood said.
She also said that Microsoft would “continue to invest against the expansive opportunity ahead across both capital expenditures and operating expenses, given our leadership position in commercial cloud, strong demand signals for our cloud and AI offerings, and significant contracted backlog.” But the company still expects growth in capex to moderate compared to this past fiscal year.
The company’s customers are rapidly ramping their use of Microsoft’s AI tools as well. Nadella noted that Microsoft launched Azure AI Foundry during the past year to help customers design, customize and manage AI applications and agents at scale.
“Customers increasingly want to use multiple AI models to meet their specific performance, cost and use case requirements,” he said. Foundry, he added, enables customers to provision inferencing throughput once and then “apply it across more models than any other hyperscaler.” He added later in the call that AI is driving a “fundamental change” in business applications as customers shift to agentic apps.
Meanwhile, Microsoft’s Copilot apps have more than 100 million active commercial and consumer users — and growing. Nadella gave a number of specific examples: Barclays started with an initial deployment of Microsoft 365 Copilot with 15,000 employees and will now roll it out to 100,000 employees globally. UBS started with 55,000 employees and is expanding to all employees. More than 25,000 Microsoft 365 Copilot “seats” were purchased this past quarter by Adobe, KPMG, Pfizer and Wells Fargo, according to Nadella.
For the full fiscal year, Microsoft’s revenues were $281.7 billion, up 15%, while its net income grew 16% to hit $101.8 billion.
