Microsoft Cloud and AI Revenue Soar

Core Insights - Microsoft reported fourth-quarter fiscal 2025 earnings with $76.4 billion in revenue, an 18% year-over-year increase in constant currency, and earnings per share of $3.65, up 22% year-over-year in constant currency [1][2] Group 1: Cloud and AI Performance - Microsoft Cloud revenue grew by 25% year-over-year, with Azure achieving $75 billion in annual revenue, a 34% increase year-over-year for fiscal 2025 [2][4] - Azure's annual revenue reached $168 billion, up 23% year-over-year, with over 400 data centers across 70 regions and more than two gigawatts of new data center capacity added [4][5] - The adoption of AI and Copilot products is expanding, with Microsoft 365 Copilot surpassing 100 million monthly active users and GitHub Copilot Enterprise customers increasing by 75% quarter-over-quarter [6][7] Group 2: Financial Metrics and Capital Allocation - The commercial remaining performance obligation (RPO) rose to $368 billion, up 35% year-over-year, with 35% expected to be recognized as revenue within 12 months [8][9] - Microsoft achieved a 45% operating margin, up two percentage points year-over-year, despite higher capital expenditures, indicating operational leverage [8] - Management anticipates capital expenditures exceeding $30 billion in the first quarter of fiscal 2026, with stable operating margins expected for the fiscal year [10] Group 3: Future Outlook - Fiscal 2026 is projected to deliver double-digit revenue and operating income growth, driven by sustained demand for cloud and AI offerings [10] - Azure revenue growth is forecasted at approximately 37% year-over-year in constant currency for the first quarter of fiscal 2026 [10]