Microsoft hails cloud and AI revenue for boffo earnings
(2025/07/31)
- Reference: 1753918830
- News link: https://www.theregister.co.uk/2025/07/30/microsoft_hails_cloud_and_ai/
- Source link:
Microsoft on Wednesday reported better than expected revenue for the fourth quarter of its 2025 fiscal year, thanks to the company's booming cloud business and, allegedly, to AI.
"Cloud and AI is the driving force of business transformation across every industry and sector," said Satya Nadella, chairman and chief executive officer of Microsoft, in a statement.
Nadella for the first time revealed revenue for Microsoft Azure, the company's cloud computing platform.
[1]
Azure, he said, exceeded $75 billion in revenue in the fiscal year ended June 30, which is up 34 percent from the prior year. That's "driven by growth across all workloads" – including AI workloads. On an average basis, Azure brought in almost $19 billion per quarter, about $10 billion shy of cloud king AWS, which recently reported net sales of about [2]$29 billion during Q1 (Amazon reports its second-quarter earnings on Thursday). Google Cloud has an annual run rate of $50 billion, per Alphabet's Q2 2025 earnings [3]report [PDF].
[4]
[5]
"We continue to lead the AI infrastructure wave and took share each quarter this year," said Nadella on [6]the company's earning call .
Nadella didn't share how AI figured into the equation, a question that was on the minds of financial analysts given Microsoft's plan to spend [7]$80 billion in FY25 capital expenditures to build out data centers capable of handling AI business.
[8]
Mark Moerdler, senior analyst at Bernstein Research, asked during the call how companies will best be able to monetize AI as a software service.
Nadella offered a rambling answer likening AI to the cloud business, which is fair enough given the two have become intertwined.
Microsoft CFO Amy Hood offered a more focused response, asserting that AI monetization will be like other software monetization.
[9]
"There's a per user logic," she said. "There's tiers of per user. Sometimes those tiers relate to consumption. Sometimes there's pure consumption models. I think you'll continue to see a blending of these, especially as the AI model capability grows."
In other words, Microsoft is adding AI capabilities to its products and fees will follow. With AI infused into every application and service, all revenue becomes attributable to AI.
And there's a lot of that revenue to go around. Overall, the IT mega-giant [10]reported $76.4 billion in revenue for the quarter, up 18 percent from last year, alongside operating income of $34.3 billion, up 23 percent, and net income of $27.2 billion, up 24 percent. Earnings per share came to $3.65, an increase of 24 percent.
For the full fiscal year, Microsoft delivered $281.7 billion in revenue, up 15 percent, with operating income of $128.5 billion, up 17 percent, and net income of $101.8 billion, up 16 percent. Earnings per share hit $13.64, up 16 percent.
[11]Devs are frustrated with AI coding tools that deliver nearly-right solutions
[12]Enterprises neglect AI security – and attackers have noticed
[13]Edge case: Opera claims Microsoft still playing dirty with defaults
[14]Europe's AI crackdown starts this week and Big Tech isn't happy
Azure is part of Microsoft's Intelligent Cloud group, which delivered revenue of $29.9 billion for the quarter, up 26 percent.
The company's Productivity and Business Processes group posted revenue of $33.1 billion, up 16 percent. That includes Microsoft 365 Commercial and Consumer products, LinkedIn, and Dynamics products.
The More Personal Computing group generated $13.5 billion, an increase of nine percent. That includes Windows OEM and Devices, Xbox content and services, plus Search and news advertising revenue.
Worries about capex and AI revenue generation don't appear to bother investors, who pushed Microsoft's stock price up about eight percent following the company's earnings report. Their enthusiasm lifted the company's market capitalization beyond [15]$4 trillion in after-hours trading, making it only the second company in history [16]after AI arms-dealer Nvidia to touch the $4,000,000,000,000 mark. ®
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[2] https://ir.aboutamazon.com/news-release/news-release-details/2025/Amazon-com-Announces-First-Quarter-Results/default.aspx
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[6] https://www.microsoft.com/en-us/investor/events/fy-2025/earnings-fy-2025-q4
[7] https://blogs.microsoft.com/on-the-issues/2025/01/03/the-golden-opportunity-for-american-ai/
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[10] https://www.microsoft.com/en-us/investor/earnings/fy-2025-q4/press-release-webcast
[11] https://www.theregister.com/2025/07/29/coders_are_using_ai_tools/
[12] https://www.theregister.com/2025/07/30/firms_are_neglecting_ai_security/
[13] https://www.theregister.com/2025/07/30/opera_microsoft_edge_complaint/
[14] https://www.theregister.com/2025/07/30/eu_ai_act/
[15] https://www.cnbc.com/2025/07/30/microsoft-market-cap-tops-4-trillion-after-hours-on-earnings-beat.html
[16] https://www.cnbc.com/2025/07/09/nvidia-4-trillion.html
[17] https://whitepapers.theregister.com/
"Cloud and AI is the driving force of business transformation across every industry and sector," said Satya Nadella, chairman and chief executive officer of Microsoft, in a statement.
Nadella for the first time revealed revenue for Microsoft Azure, the company's cloud computing platform.
[1]
Azure, he said, exceeded $75 billion in revenue in the fiscal year ended June 30, which is up 34 percent from the prior year. That's "driven by growth across all workloads" – including AI workloads. On an average basis, Azure brought in almost $19 billion per quarter, about $10 billion shy of cloud king AWS, which recently reported net sales of about [2]$29 billion during Q1 (Amazon reports its second-quarter earnings on Thursday). Google Cloud has an annual run rate of $50 billion, per Alphabet's Q2 2025 earnings [3]report [PDF].
[4]
[5]
"We continue to lead the AI infrastructure wave and took share each quarter this year," said Nadella on [6]the company's earning call .
Nadella didn't share how AI figured into the equation, a question that was on the minds of financial analysts given Microsoft's plan to spend [7]$80 billion in FY25 capital expenditures to build out data centers capable of handling AI business.
[8]
Mark Moerdler, senior analyst at Bernstein Research, asked during the call how companies will best be able to monetize AI as a software service.
Nadella offered a rambling answer likening AI to the cloud business, which is fair enough given the two have become intertwined.
Microsoft CFO Amy Hood offered a more focused response, asserting that AI monetization will be like other software monetization.
[9]
"There's a per user logic," she said. "There's tiers of per user. Sometimes those tiers relate to consumption. Sometimes there's pure consumption models. I think you'll continue to see a blending of these, especially as the AI model capability grows."
In other words, Microsoft is adding AI capabilities to its products and fees will follow. With AI infused into every application and service, all revenue becomes attributable to AI.
And there's a lot of that revenue to go around. Overall, the IT mega-giant [10]reported $76.4 billion in revenue for the quarter, up 18 percent from last year, alongside operating income of $34.3 billion, up 23 percent, and net income of $27.2 billion, up 24 percent. Earnings per share came to $3.65, an increase of 24 percent.
For the full fiscal year, Microsoft delivered $281.7 billion in revenue, up 15 percent, with operating income of $128.5 billion, up 17 percent, and net income of $101.8 billion, up 16 percent. Earnings per share hit $13.64, up 16 percent.
[11]Devs are frustrated with AI coding tools that deliver nearly-right solutions
[12]Enterprises neglect AI security – and attackers have noticed
[13]Edge case: Opera claims Microsoft still playing dirty with defaults
[14]Europe's AI crackdown starts this week and Big Tech isn't happy
Azure is part of Microsoft's Intelligent Cloud group, which delivered revenue of $29.9 billion for the quarter, up 26 percent.
The company's Productivity and Business Processes group posted revenue of $33.1 billion, up 16 percent. That includes Microsoft 365 Commercial and Consumer products, LinkedIn, and Dynamics products.
The More Personal Computing group generated $13.5 billion, an increase of nine percent. That includes Windows OEM and Devices, Xbox content and services, plus Search and news advertising revenue.
Worries about capex and AI revenue generation don't appear to bother investors, who pushed Microsoft's stock price up about eight percent following the company's earnings report. Their enthusiasm lifted the company's market capitalization beyond [15]$4 trillion in after-hours trading, making it only the second company in history [16]after AI arms-dealer Nvidia to touch the $4,000,000,000,000 mark. ®
Get our [17]Tech Resources
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[2] https://ir.aboutamazon.com/news-release/news-release-details/2025/Amazon-com-Announces-First-Quarter-Results/default.aspx
[3] https://abc.xyz/assets/cc/27/3ada14014efbadd7a58472f1f3f4/2025q2-alphabet-earnings-release.pdf
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[6] https://www.microsoft.com/en-us/investor/events/fy-2025/earnings-fy-2025-q4
[7] https://blogs.microsoft.com/on-the-issues/2025/01/03/the-golden-opportunity-for-american-ai/
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[10] https://www.microsoft.com/en-us/investor/earnings/fy-2025-q4/press-release-webcast
[11] https://www.theregister.com/2025/07/29/coders_are_using_ai_tools/
[12] https://www.theregister.com/2025/07/30/firms_are_neglecting_ai_security/
[13] https://www.theregister.com/2025/07/30/opera_microsoft_edge_complaint/
[14] https://www.theregister.com/2025/07/30/eu_ai_act/
[15] https://www.cnbc.com/2025/07/30/microsoft-market-cap-tops-4-trillion-after-hours-on-earnings-beat.html
[16] https://www.cnbc.com/2025/07/09/nvidia-4-trillion.html
[17] https://whitepapers.theregister.com/