Microsoft beats expectations, fuelled by Azure cloud business

Microsoft's quarterly earnings report exceeded expectations, driven by its Azure cloud computing division which experienced a 48% growth in the September quarter. The tech giant reported total revenue of $92.3 billion and profit of more than $36.6 billion, surpassing analyst projections of $90.6 billion in revenue and $35.1 billion in profit.

Microsoft CEO Satya Nadella attributed the strong performance to the company's focus on delivering greater capability, choice, control, and cost efficiency for customers across its entire technology stack.

The earnings report follows a recent voluntary buyout offer to about 60,000 employees, roughly a quarter of Microsoft's workforce, as the company continues to invest heavily in artificial intelligence. This is the second voluntary buyout offer from Microsoft this year, following an earlier offer in April where seven percent of its US workforce was given the option to retire early.

Microsoft's global employee count stood at 223,000 as of June, down from 228,000 at the end of 2025, according to regulatory filings. The company recently unveiled the Surface Ultra laptop, powered by Nvidia's artificial intelligence chips, priced above $2,500. This new hardware aims to enable more AI computing on-device and offline, reducing reliance on remote cloud data centers, which are slower and more expensive.

Looking ahead, analysts anticipate Microsoft will spend $51 billion on AI-related expenses from July to September, with $39 billion allocated to property and equipment. This investment positions Microsoft to compete with Amazon Web Services (AWS) and Alphabet's Google for cloud computing services customers. While AWS currently leads the sector, Microsoft holds the second position globally, followed by Google.

However, Google recently reported a doubling of revenue from its cloud division to $30.7 billion during the quarter, narrowing the gap with Microsoft's Azure, which reached $33.2 billion in the same period. Alphabet also raised $85 billion through equity offerings to fund its AI data center expansion. Meta, parent company of Facebook, announced on Monday a $35 billion stock offering to finance its AI investments.

Tech companies are projected to collectively spend hundreds of billions of dollars on AI-related expenses this year.