- Azure revenue is up 29%, but next quarter’s growth could increase 40%
- Two-thirds of last quarter’s investments were in CPUs and GPUs
- Microsoft 365 Copilot now has over 20 million paying customers
In its latest quarterly results, Microsoft confirmed an 18% rise in revenue to $82.9 billion over the past three months, with Microsoft Cloud revenue up about 29% year-over-year to $54.5 billion and Azure growth of about 40%.
However, despite significant customer spending on products and services, the company has not been immune to rising prices and the global chip shortage, said CFO Amy Hood.
With annual revenue of around $37 billion in its AI business (up 123% year over year), Microsoft is forced to spend a lot of money on AI and data center technology.
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Microsoft revenues climb, investments increase again
Evidence of continued growth comes in the form of a commercial backlog of $627 billion, up approximately 99%, indicating huge future demand for AI and the cloud.
Therefore, investments in 2026 are expected to be around the $190 billion mark, but alarmingly, Microsoft attributes around $25 billion to rising component costs. The company is also expected to spend $40 billion on hardware and data centers in the next quarter, Hood revealed.
This is a marked increase from last quarter’s $31.9 billion in investment, two-thirds of which was for “short-lived assets” like CPUs and GPUs.
Speaking about the investment projections for the fiscal year, Hood said: “We remain confident in the return on these investments given the higher demand signals and growing product usage as well as the efficiencies we are already realizing on the platform. »
As for the use of AI, Microsoft reported “more than 20 million Microsoft 365 Copilot paid seats” and noted considerable growth in the number of major customers. It has 4 times more clients with more than 50,000 seats compared to last year – Accenture represents the largest client, with more than 740,000 seats.
Looking ahead, the company is targeting total revenue growth of 13-15% for the next period, but more importantly, Azure revenue growth of around 39-40%.
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