Microsoft Reports Strong First Quarter Results Driven by Azure Growth

REDMOND, Wash. — Microsoft Corp. announced better-than-expected earnings for its fiscal first quarter, with revenue driven largely by a 40% increase in its Azure cloud business.

The technology giant reported revenue of $77.6 billion, an 18% increase from $65.6 billion reported a year ago. Net income rose to $27.7 billion, or $3.72 per share, compared to $24.67 billion, or $3.30 per share, during the same period last year.

Microsoft’s Intelligent Cloud unit, which includes Azure, contributed $30.9 billion in revenue, beating analyst expectations of $30.25 billion. The growth in Azure was significant, as it grew 40% year over year, exceeding the pre-earnings estimates of 38.2% from analysts surveyed by StreetAccount.

In addition to cloud services, Microsoft’s Productivity and Business Processes segment, which includes Office and LinkedIn, reported $33.0 billion in revenue, also surpassing the $32.33 billion consensus. The company’s More Personal Computing unit saw $13.8 billion in revenue, which was a 4% increase and above analyst expectations of $12.83 billion.

Microsoft’s scalable cloud infrastructure has been a primary growth driver in recent quarters, with fiscal revenues from Azure and other cloud services projected to exceed $75 billion, reflecting a 34% surge from the previous year. The transition to artificial intelligence remains a critical component of its growth strategy, largely credited to its partnership with OpenAI.

On October 17, Microsoft CEO Satya Nadella discussed the company’s advancements during a conference in Berlin. As the anticipation builds, Microsoft is set to hold a quarterly earnings call for investors at 5:30 p.m. ET on Wednesday, October 29.

Options trading suggests traders expect Microsoft shares to experience movements up to 4.2% by the week’s end, potentially reaching an all-time high of around $565. This stock has consistently shown volatility post-earnings, averaging nearly 6% swings following its last four reports.

Amidst economic uncertainties earlier this year, Microsoft’s stock has rebounded nearly 29% year-to-date, bolstered by optimism surrounding trade deals and AI advancements. Most analysts predict the company will report continued strong revenue growth, with Azure expected to grow by 38% year-over-year.

Investors and analysts are highly optimistic about Microsoft’s performance, with all 16 analysts tracked by Visible Alpha rating the stock a “Buy” and projecting a significant upside.

Microsoft’s stock finished trading up nearly 2% on October 28, reflecting confidence as earnings approaches.