Microsoft forecasts stronger Azure growth as cloud revenue jumps 48%
Microsoft reported a 48% rise in Azure revenue and projected second-quarter cloud growth of up to 50%, beating analyst expectations and lifting its shares.
Microsoft said its fiscal first-quarter Azure cloud business grew 48% to $33.17 billion, surpassing analysts' estimates. The company forecast second-quarter Azure growth of 49%-50%, above the 47.6% consensus, and projected total sales of $96-97.1 billion, also exceeding forecasts. Free cash flow reached $18.6 billion, roughly $10 billion more than analysts had expected, while capital spending of $45.2 billion fell short of the company’s own $50 billion target.
Chief Executive Officer Satya Nadella told analysts that the market is moving beyond short-term, high-profile AI purchases toward longer-term commitments from a broader customer base. He said Microsoft is expanding AI options, including lower-cost models, and aims to make its Copilot products more useful by integrating the latest advances for wider deployment.
Analyst Jesse Cohen of Investing.com described the earnings report as “as clean as it gets for a company this size,” noting that strong demand and a large commercial backlog are helping Microsoft offset concerns about AI spending that have affected peers.
Investor-relations vice-president Jonathan Neilson attributed the lower capital-expenditure figure to delayed third-party capacity deliveries rather than a change in spending plans. He said the company expects to continue its investment trajectory later in the year.
The results contrast with rivals Alphabet and Meta, which reported weaker free-cash-flow positions after heavy AI investments. Overall, Big Tech is expected to invest more than $700 billion this year in data-center infrastructure and AI hardware, raising questions about financing costs and debt levels.