Microsoft has posted a surge in quarterly profits, propelled by unprecedented demand for artificial intelligence (AI) services and record-breaking revenues from its cloud computing division.
In a filing released Wednesday, the tech giant reported net income of $27.2 billion for the fiscal fourth quarter, marking a 24% increase year-over-year and beating Wall Street estimates of $25.3 billion. Revenue for the quarter rose 18% to $76.4 billion, surpassing the $73.9 billion average forecast compiled by Visible Alpha.
“Cloud and AI is the driving force of business transformation across every industry and sector,” said CEO Satya Nadella, underscoring the growing influence of AI in reshaping enterprise operations worldwide.
Investors responded positively to the earnings report, sending Microsoft shares up 7% in after-hours trading. The company’s stock had already climbed 22% in 2025, reflecting investor confidence in Microsoft’s leadership in the AI space. With a market capitalization of $3.8 trillion, Microsoft trails only Nvidia, whose chips power much of today’s AI infrastructure.
For the first time, Microsoft broke out revenue from its Azure cloud platform, revealing that it generated a record $75 billion in the fiscal year ending June. Azure’s revenue grew 34% year-over-year, highlighting its central role in Microsoft’s cloud strategy. In the final quarter alone, the company’s overall cloud revenue reached $46.7 billion, up from $36.9 billion in the same period last year.
The detailed disclosure comes after sustained pressure from investors demanding transparency on how AI-related investments are contributing to bottom-line growth. In response, Microsoft has increased capital expenditure by 27% year-over-year to $24.2 billion, compared to $21.4 billion in the previous quarter—primarily to bolster its data center and AI infrastructure.
The results put Microsoft in a strong position amid intensifying competition in the AI and cloud markets. Just last week, rival Alphabet announced it would raise its AI infrastructure spending by $10 billion to $85 billion this year, following a nearly one-third jump in cloud-related earnings.
