Microsoft Azure revenue tops $100 bn as cloud growth hits 4-year high

Microsoft cloud unit, Azure, grew at the fastest clip in four years and the pace is accelerating, suggesting the company’s AI and computing services are making inroads with customers. Azure cloud revenue rose 43 per cent during the fiscal fourth quarter, the  company said Wednesday in a statement. That was the fastest quarterly growth since early 2022 and topped analysts’ average estimate for a 40 per cent increase.

 

Azure revenue surpassed $100 billion for the first time during the financial year ended in June. Chief Financial Officer Amy Hood said she expected growth in the cloud unit to accelerate further in the current quarter, to about 45 per cent. “Demand continues to exceed available supply,” she said during a conference call with analysts. Microsoft on Wednesday said it expects to keep generating cash through its just started fiscal 2027 and gave a capital expenditure forecast below Wall Street estimates after an accounting change for data centre leases.

 

 

The company also forecast sales growth that beat expectations for its current fiscal first quarter. All told, the metrics were a sign Microsoft’s massive AI spending bets were paying off, easing investor concerns that one of tech’s biggest cash generators was spending heavily in pursuit of profits that had yet to materialise.

 

They also appeared to give investors confidence that Microsoft, which is facing a strong challenge from long-time rival Google in its cloud business, can hang on to its number two position behind cloud leader Amazon. On conference call with analysts, CEO Satya Nadella outlined a vision in which Microsoft and its customers would be free to pick and choose AI technologies based on their cost and performance needs.

 

“That's really the enterprise design architecture that we are going to evangelise. We ourselves are using it,” Nadella said. Microsoft’s report follows Google Cloud’s blockbuster quarter, with the rival posting an 82 per cent surge in cloud revenue last week, far ahead of market expectations.