Microsoft reported record quarterly profit and forecast accelerating cloud growth on Wednesday, validating the company's massive capital spending on artificial intelligence infrastructure as investors question whether AI investments will generate real returns. Shares surged as much as 10% in pre-market trading Thursday.
The technology giant posted net profit of €31.3bn for the April-June period, up 31% year-on-year, though the figure includes a €2.8bn unrealised gain on Microsoft's stake in AI firm Anthropic. Revenue climbed 18% to €78.7bn, beating analysts' €76.6bn forecast. Diluted earnings per share reached €4.20, above the €3.71 consensus.
Cloud Infrastructure Drives Growth
Microsoft Cloud revenue hit €51.9bn in the quarter, up 27%. Azure and other cloud services revenue increased 43%, with the company reporting demand continues to exceed available capacity despite bringing additional computing infrastructure online. For the full fiscal year ended in June, Microsoft reported €289.9bn in revenue — the first time Azure surpassed €87.4bn annually.
"This year, Azure revenue surpassed €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," CEO Satya Nadella said in a statement Wednesday. Michael J. Wolf, founder and CEO of Activate Consulting, said the concurrent Azure and Copilot growth indicates Microsoft is "winning on both fronts" by "supplying the cloud infrastructure for enterprise AI while monetising the AI tools embedded in the products workers use every day."
For the July-September quarter, Microsoft expects revenue between €78.5bn and €79.5bn, representing growth of 16% to 17%. It forecast Azure revenue would grow approximately 45% in constant currency, up from 43% in the quarter just ended.
Capital Spending Plans Unchanged
Chief financial officer Amy Hood told investors the company's capital expenditure plans for the 2026 calendar year remain unchanged. An accounting change will bring guidance closer to approximately €152.9bn, Hood said, but in practice expectations remain "unchanged." Hood said earlier this year the company expects to invest €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 Profit Slides on Legal Costs
Meta Platforms reported Wednesday its second-quarter profit declined even as revenue beat expectations, as legal expenses and severance costs weighed on results. The Facebook and Instagram parent company earned €13.8bn in the April-June period, down 14% from €16bn in the same period a year earlier. Revenue grew 28% to €53.1bn from €41.5bn.
Meta earned €5.40 per share, below the €6.30 expected by analysts surveyed by FactSet. Analysts had forecast revenue of €52.6bn. Total costs and expenses jumped 55% to €36.7bn, including €2.1bn in charges related to legal proceedings and €1.03bn in severance expenses connected with Meta's May workforce reduction this year. 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."
Why This Matters:
Microsoft's results provide the clearest evidence yet that European and global enterprises are willing to pay for AI infrastructure and tools, not just experiment with them. The company's ability to convert €165.9bn in planned capital spending into accelerating revenue growth matters for every government and business leader evaluating their own AI investments. Azure's capacity constraints suggest demand is structural, not speculative. For European policymakers concerned about the continent's digital competitiveness, the figures are sobering: American firms continue to dominate cloud infrastructure while European alternatives struggle to scale. Meta's profit decline, driven by legal costs and restructuring charges, shows even the largest platforms aren't immune to regulatory and operational pressures. The 55% jump in costs highlights the financial burden of compliance and workforce adjustments in a tightening environment.