Microsoft Azure revenue surges 48% to $33.2B, beating expectations as cloud and AI demand grows

Microsoft’s Azure cloud business brought in $33.2 billion in revenue in the September quarter, up 48% from a year earlier, blowing past the company’s own forecast and beating Wall Street’s expectations.

The growth suggests that Microsoft is selling cloud and AI computing about as fast as it can install it. Azure revenue rose $10.8 billion from a year earlier, driven by demand for services across the platform, Microsoft said in its quarterly filing. That came even as some new data center capacity arrived late.

For investors worried about Microsoft’s record capital spending, it’s a sign that the company’s massive AI and cloud infrastructure buildout is turning into sales. Microsoft’s shares rose nearly 4% in after-hours trading following the earnings report.

Overall, Microsoft reported revenue of $92.3 billion for the first quarter of its 2027 fiscal year, up 19% and above the $90.75 billion analysts expected, according to Yahoo Finance. Earnings were $4.89 per share excluding the impact of its OpenAI investment, compared with expectations of $4.72.

It’s the first time Microsoft has reported Azure’s quarterly revenue figure, not just its growth. The disclosure is part of a new financial structure that took effect this quarter, splitting the company into two segments: Agents and Infra, and Devices and Consumer.

• Agents and Infra (Azure, Microsoft 365, Dynamics, LinkedIn’s recruiting and sales tools, and server and productivity licensing): Revenue rose 25% to $76.8 billion, above Microsoft’s forecast of $75.15 billion to $75.75 billion. Operating income rose 24% to $40.6 billion.
• Devices and Consumer (Windows, Xbox, and search and advertising): Revenue fell 3% to $15.5 billion, above Microsoft’s forecast of $14.7 billion to $15.2 billion. Operating income rose 2% to $5.4 billion.

Capital spending came in below Microsoft’s forecast. The company spent $45.2 billion, including finance leases, short of the more than $50 billion it expected. Some data center capacity that third parties were supposed to deliver in the quarter was delayed, the company said.

Google Cloud, which includes Google’s Workspace productivity apps, brought in $30.7 billion in revenue in the quarter, up 103% from a year earlier, Alphabet reported Wednesday afternoon.

Amazon reports earnings Thursday afternoon, including AWS results.

Update, 3:05 p.m.:Microsoft expects Azure growth to accelerate again this quarter, to 49% to 50% excluding currency changes, CFO Amy Hood said on the earnings call. “Customer demand continues to exceed available supply,” she said.

Hood said Azure’s growth came from Foundry, Microsoft’s service for building AI apps and agents, and from engineering work that let Microsoft sell unused capacity on its existing servers. That helped make up for delays in new data center capacity that outside providers were supposed to deliver.

Those delays pushed some spending later into the fiscal year. Microsoft now expects to spend about $170 billion on capital expenditures in calendar 2026, down from about $175 billion. It expects to spend more than $50 billion this quarter, and Hood said spending will accelerate in the first half of calendar 2027.

Hood also said Microsoft may tap additional sources of financing to help pay for the buildout, “when we believe it is attractive to do so.” The company still expects to bring in more cash than it spends this fiscal year.

Microsoft’s expense forecast for the December quarter includes an estimate for the buyout offer it announced Monday, Hood said, though she didn’t give the amount.

The company expects total revenue of $96 billion to $97.1 billion for the December quarter, above the $95.7 billion analysts expected, according to Yahoo Finance.