Microsoft reported an 18% increase in revenue to $82.9 billion for the most recent quarter, driven by significant growth in its cloud services. Microsoft Cloud revenue rose approximately 29% year-over-year to $54.5 billion, while Azure grew about 40% year-over-year, highlighting strong demand for its offerings.
Despite the robust revenue figures, Microsoft faces challenges stemming from rising prices of components and silicon shortages. CFO Amy Hood stated that the company must increase spending on AI and data center technology, which is now at an annual revenue run rate of around $37 billion, up 123% year-over-year.
Microsoft’s commercial backlog reached $627 billion, indicating a 99% increase that reflects sustained future demand for AI and cloud services. The company expects its capital expenditure (capex) for 2026 to hit approximately $190 billion, with about $25 billion attributed to rising component costs. In the upcoming quarter, Microsoft plans to invest $40 billion on hardware and data centers.
For context, last quarter’s capex stood at $31.9 billion, with two-thirds allocated to short-lived assets such as CPUs and GPUs. Hood expressed confidence in the company’s investments. She remarked, “We remain confident in the return on these investments given higher demand signals and increasing product usage as well as the efficiencies we’re already driving across the platform.”
On the AI front, Microsoft noted that it has over 20 million paying customers for Microsoft 365 Copilot, showing significant growth, particularly among larger clients. The number of customers with more than 50,000 seats has quadrupled compared to last year, with Accenture emerging as the largest customer at over 740,000 seats.
Looking ahead, Microsoft aims for total revenue growth of 13-15% in the next quarter, with Azure revenue growth expectations set at around 39-40%.
