Microsoft shares rise 5% after cloud revenue beats expectations

In short: Microsoft’s stock rose more than 5% after it reported higher than expected sales in its cloud business.

What happened

Microsoft said total revenue, meaning money brought in from sales, rose 19% to $92.3 billion in the three months ending September 30. Analysts on Wall Street had expected about $90.6 billion.

The company also shared a clearer breakdown of its cloud business for the first time. Cloud services are like renting computing power and storage over the internet instead of running your own servers (big computers in a back room). Microsoft reported $33.2 billion in sales for Azure, its main cloud division, up 48% from $22.4 billion a year earlier. Analysts had expected $32.3 billion.

Profit also increased. Microsoft said net income, which is earnings after costs and taxes, rose 32% to $36.6 billion.

Microsoft is spending heavily on AI infrastructure. That includes data centres, which are large buildings filled with computers that run online services (like a warehouse, but for computing). The company says demand for this capacity is strong.

Separately, Microsoft said earlier this week that it would offer buyout packages to up to 60,000 staff across the US, Canada, the UK, and India. It has said the goal is to control costs and reduce headcount.

Why it matters

Cloud growth is a key signal of Microsoft’s health because many businesses rely on Azure for everyday online work. Strong cloud sales can help fund Microsoft’s large spending on AI and data centres, even as it tries to reduce costs through staff buyouts.

Source: Financial Times