Microsoft outlines Q2 revenue $96B-$97.1B and Azure growth 49%-50% as CapEx moves above $50B

Microsoft Corp. reported stronger-than-expected earnings and revenue in its fiscal 2027 first quarter, driven by a 48% growth in its Azure cloud infrastructure business. The company's stock rose by about 4% after-hours following the results. Microsoft reported earnings per share of $4.89, surpassing the forecast of $4.73 per share, while revenue for the period increased 19% to $92.28 billion, exceeding the $90.69 billion target.

Net income grew to $36.63 billion, up from $27.75 billion in the same period last year. Microsoft disclosed the exact revenue from the Azure business for the first time, revealing $33.17 billion, above analysts' expectations of $32.32 billion. The revenue growth was seen across the Agents and Infra segment, which reported a 25% increase to $76.8 billion.

However, the Devices and Consumer segment saw a 3% decline but still met the Street's target of $15.05 billion. Microsoft's capital expenditures rose by 30% to $45.2 billion, reflecting its focus on AI infrastructure. Despite a decline in free cash flow, Microsoft is confident in its ability to fund investments and has access to other funding options. Analysts predict Azure revenue to grow by 49% to 50% in the next fiscal quarter.