Big boost for Satya Nadella's Microsoft as it hits jackpot in..., earns Rs...

Microsoft announced on Wednesday that annual revenue for its flagship Azure cloud computing platform has surpassed USD 75 billion (approximately Rs 6,567,401,925,000), representing a 34% increase from the same period last year. The software company also witnessed its share going up to 9% in extended trading. This was the largest ever capital expenditure forecast for a single quarter “We continue to scale our own data center capacity faster than any other competitor,” CEO Satya Nadella said on an investor call, boasting that the company now has more than 400 of the sprawling facilities across six continents. With the revelation coming for the first time, Microsoft surpassed the expectations for USD 74.62 billion. The revelation came in the software giant’s end-of-year earnings report, one that also showed a 24% spike in the company’s quarterly profit that beat Wall Street expectations.

How is Microsoft gaining profit? 

The company did not reveal its revenue until Wednesday. Microsoft’s fiscal fourth-quarter profit was $34.3 billion, or USD 3.65 per share, beating analyst expectations for $3.37 per share. Microsoft and Meta's results helped fuel a $500-billion gain in AI stocks. For the April-June period, it posted revenue of USD 76.4 billion which was more than 18% from last year. Analysts polled by FactSet Research had been looking for revenue of USD 73.86 billion.

It still trails behind its lead competitor, Amazon Web Services, which reported USD 107.6 billion in revenue for its fiscal year that ended in December. Building the infrastructure to power cloud and AI technology is expensive, and Microsoft has looked for savings elsewhere. It announced layoffs of about 15,000 workers this year even as its profits have soared. Nadella told employees last week the layoffs were “weighing heavily” on him but also positioned them as an opportunity to reimagine the company’s mission for an AI era.

Google said after releasing its earnings last week, it would raise its budget for capital expenditures by an additional $10 billion to $85 billion. Microsoft’s chief financial officer, Amy Hood, said she expects capital spending for the July-September quarter to be $30 billion. "I feel very good that the spend that we're making is correlated to basically contracted, on-the-books business that we need to deliver," she said.Microsoft didn’t disclose Wednesday to what extent sweeping US tariffs are affecting its revenue, but its annual report lists tariffs among a number of risks the company faces.

What is the Azure cloud business?

The Azure cloud business is at the centre of Microsoft’s efforts to shift its focus to artificial intelligence. Microsoft Azure is a platform for cloud computing that offers services like computing power, networking, databases, and software applications. It helps businesses to run their work on the cloud without any need of physical hardware.  Microsoft launched Azure more than a decade ago, but the service has increasingly become intertwined with its AI ambitions, as the company looks to sell its AI chatbot and other tools to big business customers that are also reliant on its core online services.