Microsoft shares surged by as much as 10% in pre-market trading on Thursday after the company reported record quarterly profit and forecast stronger-than-expected revenue and accelerating growth at its Azure cloud business. The numbers are huge. So is the machinery behind them. Microsoft said its investment in artificial intelligence was paying off, and investors immediately rewarded the company that keeps turning workplace software and cloud infrastructure into a profit engine.
The Profit Machine
For the July-September quarter, Microsoft expects revenue of between $89.85bn (€78.5bn) and $90.95bn (€79.5bn), representing growth of 16% to 17%. It also forecast Azure revenue would grow by approximately 45% in constant currency, up from 43% in the quarter just ended. That’s the language of expansion, not restraint. The company is telling markets it can keep extracting more from the same digital infrastructure, with AI as the latest excuse and cloud dominance as the real prize.
The upbeat outlook followed better-than-expected fiscal fourth-quarter results. Revenue rose 18% year-on-year to $90bn (€78.7bn) in the April-June period, beating the $87.6bn (€76.6bn) forecast by analysts surveyed by FactSet. Net profit climbed 31% to a record $35.8bn (€31.3bn), although the figure was boosted by a $3.2bn (€2.8bn) unrealised gain on Microsoft’s investment in artificial intelligence company Anthropic. Diluted earnings per share reached $4.81 (€4.20), above analysts’ forecast of $4.24 (€3.71).
Microsoft Cloud revenue was $59.3bn (€51.9bn) in the quarter, up 27% year-on-year. Azure and other cloud services revenue increased by 43%. Microsoft said demand for Azure continued to exceed available capacity, despite bringing additional computing infrastructure online during the quarter. For the full fiscal year ended in June, the company reported $331.8bn (€289.9bn) in revenue. The scale is obscene, and the appetite keeps growing.
AI, Capital, and the Workplace
“This year, Azure revenue surpassed $100bn (€87.4bn) for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation,” Microsoft CEO Satya Nadella said in a statement on Wednesday. Michael J. Wolf, founder and CEO of Activate Consulting, said the concurrent Azure and Copilot growth indicates that Microsoft is “winning on both fronts.” He said Microsoft is doing so by “supplying the cloud infrastructure for enterprise AI while monetising the AI tools embedded in the products workers use every day.”
That’s the business model in plain English. Build the infrastructure. Embed the tools. Charge everyone twice.
Investors had been looking for evidence that Azure and Copilot, Microsoft’s flagship AI assistant, could eventually produce returns as concerns about high AI spending have steadily grown across the industry. Chief financial officer Amy Hood told investors on a call that the company’s capital expenditure plans for the 2026 calendar year remain unchanged. An accounting change will bring that guidance closer to approximately $175bn (€152.9bn), Hood said, but in practice, the expectations remain “unchanged.” Hood said earlier this year that the company expects to invest $190bn (€165.9bn) in capital expenditures in 2026. Bryan Hayes, an investment strategist at Zacks Investment Research, said in a statement that “for the first time in three quarters, the market appears willing to grant that the spending is buying something real.” Danielle Criste, Microsoft’s director of investor relations, said, “We remain very confident in the long-term return on these investments, given these strong demand signals, the increasing product usage we’ve seen and the efficiencies that we’re driving across the platform.”
Meta’s Costs, Cuts, and the AI Sales Pitch
Meta Platforms said Wednesday its second-quarter profit declined even as revenue beat Wall Street’s expectations, as legal expenses and severance costs weighed on its results. The Facebook and Instagram parent company earned $15.85bn (€13.8bn) in the April-June period, down 14% from $18.34bn (€16bn) in the same period a year earlier. Revenue grew 28% to $60.8bn (€53.1bn) from $47.52bn (€41.5bn). Meta earned $6.18 (€5.40) per share, below the $7.19 (€6.30) expected by analysts surveyed by FactSet. Analysts had forecast revenue of $60.22bn (€52.6bn).
Total costs and expenses jumped 55% to $42.03bn (€36.7bn), including $2.4bn (€2.1bn) in charges related to legal proceedings and $1.18bn (€1.03bn) in severance expenses connected with Meta’s May workforce reduction. Its operating margin narrowed to 31% from 43% a year earlier. Mark Zuckerberg, Meta’s CEO, said in a statement: “AI is accelerating our core business today, powering our next generation of products, and opening the door to entirely new enterprise opportunities. The results are already showing, and I’m optimistic about the potential ahead.”
The corporate script is familiar. AI is sold as progress, while the costs show up as legal bills, severance, and a workforce reduction. The profits remain private. The damage gets spread around.