Microsoft reports earnings beat as Azure revenue climbs 40%

Core Insights - Microsoft reported better-than-expected fiscal first quarter results, with significant growth in its Azure cloud business, which saw a revenue increase of 40% [1][2] - The company's total revenue reached $77.67 billion, surpassing expectations of $75.33 billion, marking an 18% increase from $65.6 billion a year ago [1] - Net income rose to $27.7 billion, or $3.72 per share, compared to $24.67 billion, or $3.30 per share, during the same period last year [1] Revenue Breakdown - The Intelligent Cloud unit, including Azure, generated $30.9 billion in revenue, up 28%, exceeding the consensus of $30.25 billion [2] - Azure revenue specifically grew 40%, or 39% in constant currency, surpassing analyst expectations of 38.2% [2] - The Productivity and Business Processes segment, which includes Office and LinkedIn, reported $33.0 billion in revenue, slightly below the $32.33 billion consensus [3] - The More Personal Computing unit, covering Windows, search advertising, devices, and video games, achieved $13.8 billion in revenue, up 4% and above the $12.83 billion consensus [3] Growth Drivers - Cloud services remain a primary growth driver for Microsoft, benefiting significantly from the artificial intelligence boom [4] - Microsoft disclosed that revenue from Azure and other cloud services is projected to exceed $75 billion in fiscal 2025, reflecting a 34% increase from the previous year [4] - The company's AI momentum is largely attributed to its partnership with OpenAI, which has been instrumental in driving growth [4] OpenAI Stake - OpenAI announced its restructuring, revealing Microsoft's 27% stake in the for-profit arm, valued at approximately $135 billion [5] - OpenAI's nonprofit will hold a 26% stake worth about $130 billion, with the remaining 47% owned by current and former employees and investors [5] - Microsoft is scheduled to hold its quarterly call with investors, indicating ongoing engagement with stakeholders [5]