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Microsoft said its Azure cloud platform has surpassed the $75 billion in annual revenue mark, representing a 34 percent growth over the prior year. The milestone underscores the increasing importance of Azure in the transformation of the company to artificial intelligence, to which Microsoft has now linked its artificial intelligence tools so closely to the cloud infrastructure. The company has never disclosed this publicly before, so it is a new look into its cloud strategy, and the company will be making more money on the Azure side.
In addition to the performance of Azure, Microsoft has also registered an increase of 24 percent in the quarterly profits. The net income was $34.3 billion, or $3.65 per share, exceeding the expectations of analysts by the amount of $3.37 per share. Income during the June quarter came to $76.4 billion, also exceeding the expectations. The robust financials strengthened the investor confidence as Microsoft continued to invest in data centres and AI development.
Microsoft CEO Satya Nadella notes that the company is growing its data centre capacity more than any other competitor and now has more than 400 data centres spread over six continents. This is to serve its growing AI and cloud demands, but at a high price. To control the costs, Microsoft has dismissed approximately 15000 people this year. The overall numbers of employees are the same at 228,000, but there is a shift in the positions, with more being based in the U.S. and fewer support or consulting positions.
Even though Azure has made progress, it continues to lag behind Amazon Web Services, which generated $107.6 billion in the last financial year. Microsoft is on the verge of getting on the bandwagon by boosting capital spending. CFO Amy Hood reported that the company will spend at least $30 billion in the July-September period. Google has also increased its capital expenditure to $85 billion, as there is intense rivalry in the AI and cloud market.
Microsoft cited trade tensions and U.S. tariffs as a threat to its cloud and device supply chain. Although it did not measure the effects of tariffs, the company accepted the fact that world instability and the changing policies of the U.S. present difficulties in business planning. Microsoft underlined that the fluctuation in tariffs can negatively impact the cost competitiveness of its cloud and device businesses.
