Microsoft (MSFT) posted its first-quarter earnings following the market close on Wednesday, easily surpassing Wall Street’s forecasts for both revenue and profit, propelled by the continued strength of its cloud operations.
For the quarter, the tech giant revealed earnings per share (EPS) of $3.72 on revenue of $77.7 billion, outperforming analyst forecasts of $3.68 EPS on $75.5 billion in revenue, as per the Bloomberg consensus estimates. That’s a sharp rise from the same period last year, when Microsoft estimated $3.30 EPS on $65.6 billion in revenue.
Cloud Remains the Star Performer
Microsoft’s commercial cloud division once again took the lead, generating $49.1 billion in revenue, a 26% climb year-over-year, topping analyst predictions of $48.6 billion. Within that, Intelligent Cloud, including Azure, reached $30.9 billion, beating the $30.2 billion forecast from Wall Street.
But while growth was robust, expenses elevated as well. The company disclosed that its capital expenditures skyrocketed 74% year-over-year to $34.9 billion, with almost half of that spending allocated to GPUs and CPUs to meet the soaring demand for Azure’s AI-driven workloads.
After the earnings release, Microsoft’s stock dipped more than 2%, as investors digested the climb in costs and ongoing infrastructure investments.
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Outages and AI Partnerships
Microsoft’s announcement came on the heels of a temporary Azure service outage on Wednesday that interrupted businesses globally. The timing coincided with a similar challenge experienced by Amazon’s AWS just a week earlier, showing how significant and occasionally vulnerable, the global cloud infrastructure has become.Beyond its major financials, Microsoft also made headlines for redefining its partnership with OpenAI (OPAI.PVT). The firms reached a fresh agreement that allows OpenAI to restructure into a for-profit public benefit corporation governed by its nonprofit entity.As per the revamped deal, “Microsoft will hold 27% of the OpenAI Group PBC, valued at roughly $135 billion, while OpenAI’s nonprofit arm will hold a $130 billion stake in the for-profit.”
The strengthened partnership is anticipated to support both sides scale AI innovation. Microsoft, which has invested billions into OpenAI, remains to integrate its partner’s technology into Azure and other products, a move that adds demand for its cloud infrastructure.
Earlier, Microsoft functioned as OpenAI’s exclusive cloud provider, but under a latest arrangement, OpenAI can currently collaborate with other cloud companies, that includes Oracle (ORCL), to broaden capacity for its “Stargate Project” data centers. The revised deal also means Microsoft loses its initial right of refusal, though OpenAI committed to spend $250 billion on Azure usage, maintaining a strong commercial bond.
FAQs:
1. What did Microsoft report for its latest quarter?
Microsoft posted $77.7 billion in revenue and $3.72 earnings per share, beating Wall Street estimates. T
2. How did Microsoft’s cloud division perform?
Cloud revenue jumped 26% year-over-year to $49.1 billion.
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