Microsoft Posts Record $92.3B Quarter as AI Demand Lifts Azure to $33.2B

Microsoft has reported record quarterly revenue of $92.3 billion, up 19% year over year, marking its tenth consecutive record-breaking quarter. Net income rose 32% on a GAAP basis to $36.6 billion, driven largely by Microsoft Cloud, which generated $63.9 billion, an increase of 30%.

For the first time, Microsoft disclosed Azure’s quarterly revenue in dollars, reporting $33.2 billion for the July to September period, up 48% from a year earlier. Azure, where businesses rent computing power to run applications and build and operate AI models, is now Microsoft’s largest and fastest-growing product line, accounting for roughly 36% of total revenue. The figure beat analyst expectations of $32.3 billion by about $850 million, and its growth rate exceeded the 44% to 45% forecast by CFO Amy Hood on the company’s July earnings call.

The disclosure allows direct comparison with rivals. Alphabet reported Google Cloud revenue of $30.7 billion for the same quarter, placing Azure slightly ahead, though Google Cloud, which includes Workspace subscriptions, roughly doubled its revenue and grew about twice as fast. Amazon Web Services, the largest cloud provider, reports on Thursday.

AI is a significant contributor. Microsoft reported $10 billion in revenue from OpenAI, which continues to run many of its services on Microsoft’s cloud despite expanding to AWS, Oracle and others. Anthropic also runs on Azure. Microsoft said its commercial remaining performance obligation, representing future revenue under existing contracts including those with AI labs, rose 73% to $677 billion. Not all cloud revenue is AI-related, however, as enterprises also run traditional software and SaaS applications on Azure, and Microsoft 365 contributed nearly $28 billion.

Microsoft has reorganized its reporting into two segments. Agents and Infra, which combines Azure with Microsoft 365’s cloud business, brought in $76.8 billion, up 25%. Devices and Consumer revenue fell 3% to $15.5 billion, with Windows OEM and devices revenue down 22%. The company previously reported three segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing.

To meet growing AI demand, Microsoft continues to invest heavily, with capital expenditures reaching an all-time quarterly high of more than $45.2 billion.