- Azure revenue up 29%, but next quarter growth could jump 40%
- Two-thirds of last quarter’s capex was dedicated to CPUs, GPUs
- Microsoft 365 Copilot now has over 20 million paying customers
In its latest quarterly results, Microsoft confirmed an 18% increase in revenue to $82.9 billion for the past three months, with Microsoft Cloud revenue up around 29% year-on-year to $54.5 billion and Azure growth around 40%.
But despite heavy spending by customers on its products and services, the company has not been immune to rising prices and global chip shortages, explained CFO Amy Hood.
With its AI business now at about $37 billion in annual revenue (up 123% year-over-year), Microsoft is forced to spend big on AI and data center technology.
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Microsoft’s revenue rises, capex rises further
Evidence of continued growth comes in the form of a commercial backlog of $627 billion, up about 99%, indicating huge demand for AI and cloud.
As a result, 2026 capex is expected to be around the $190 billion mark, but alarmingly, Microsoft attributes about $25 billion of that to rising component costs. The company is also set to spend $40 billion on hardware and data centers in the next quarter, Hood revealed.
That’s a significant increase from last quarter’s $31.9 billion capex, two-thirds of which was earmarked for “short-lived assets” like CPUs and GPUs.
Speaking about the budget year’s investment forecasts, Hood said: “We remain confident in the return on these investments given higher demand signals and increased product consumption, as well as the efficiencies we are already driving across the platform.”
Regarding the use of artificial intelligence, Microsoft stated “over 20 million Microsoft 365 Copilot paid seats” and noted significant growth in large customers. It has had 4 times as many customers with over 50,000 seats compared to last year – Accenture represents the largest customer with over 740,000 seats.
Looking ahead, the company is targeting 13-15% overall revenue growth for the next period, but more importantly, around 39-40% in Azure revenue growth.
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