Microsoft Rides ‘AI Infrastructure Wave' as Cloud Services Demand Jumps

Core Insights - Microsoft has expanded its data center footprint to over 400 sites in 70 regions and introduced a sovereign cloud offering, expecting to spend $30 billion in capital expenditures in Q1 to meet AI infrastructure demand [1][8][14] - Azure revenue reached a record $75 billion for the year, with a 34% increase in annual revenue, driven by demand for cloud and AI services [2][4][5] Financial Performance - Microsoft reported higher-than-expected revenue and earnings growth in its fiscal fourth quarter, with net income of $27.2 billion, or $3.65 per share, a 24% increase year-over-year [9][10] - Total revenue for the fiscal year was $281.7 billion, up 15%, with net income of $101.8 billion and earnings per share of $13.64, a 16% increase [14] Business Unit Growth - Nearly all business units experienced double-digit percentage growth, with productivity and business processes revenue rising 16% to $33.1 billion [4][12] - Microsoft 365 Commercial cloud revenue increased by 18%, and the company added a record number of new Copilot customers during the quarter [12] Cloud and AI Services - Microsoft's cloud revenues, including Azure and other services, totaled $168 billion for the year, up 23% year-over-year [5] - Azure AI remains a key priority, with 57% of CIOs expecting to use Azure OpenAI Services and 31% planning to use GitHub Copilot in the next 12 months [7] Market Position and Future Outlook - Morgan Stanley analysts predict continued robust growth for Azure, with 52% of CIOs indicating their application workloads are in Azure [6] - Microsoft expects continued double-digit growth in revenue and operating income in fiscal 2026, supported by strong demand for cloud and AI [14]