Software King of the World Microsoft is still riding the cloud boom while it shovels cash into AI kit.
The software giant reported robust cloud growth and a lift in paid AI subscribers, giving jittery investors a breather as AI spending balloons. Sales hit $82.9 billion, up 18 per cent from the March quarter a year earlier, while net income landed at $31.8 billion.
Both numbers beat the cocaine nose jobs of Wall Street expectations, and shares stayed roughly flat after hours after Vole guided to 13 per cent to 15 per cent revenue growth in the June quarter. Capital spending this year will reach $190 billion, a 61 per cent jump on 2025.
Microsoft’s chief financial officer, Amy Hood, said, “Broad and growing customer demand continues to exceed supply,” then added, “We remain confident in the return on these investments.”
Top Vole Satya Nadella has been pushing the company into full AI powerhouse mode. Azure has become the infrastructure backbone for AI startup OpenAI and others building AI apps, but the data centre build-out has struggled to keep up.
Copilot remains the awkward bit, with AI assistants stuffed into Office, Teams and GitHub while Microsoft tries to turn free clicks into paid seats. It has even let models from AI startup Anthropic into Copilot, which is not the move of a firm feeling totally relaxed.
Microsoft said Copilot now has 20 million paid users, up 33 per cent since January. Azure revenue growth came in at 40 per cent, in line with expectations, and capital spending for the quarter was about $31.9 billion, more than eight per cent lower than projections.
Earlier this week, Microsoft and OpenAI signed a revised agreement that gives OpenAI more freedom to partner with Microsoft’s rivals. It caps how much revenue OpenAI must share with Microsoft through 2030 while maintaining Microsoft’s access to OpenAI’s models and products.
The companies said the revised deal offers greater predictability and is “grounded in flexibility, certainty and a focus on delivering the benefits of AI broadly.”
The rewrite followed months of tense talks, partly tied to the extent of Volish control over OpenAI’s intellectual property. OpenAI even weighed going to antitrust regulators as an escape hatch.
