Microsoft announced that its Azure cloud business exceeded $100 billion in annual revenue for the first time in its recently ended fiscal year, marking a 41% increase from the previous year’s $75 billion, according to fortune.com. This milestone was part of a broader quarterly revenue of $90 billion, beating analyst estimates of $87.7 billion.
The growth in Azure revenue was driven by a 43% year-over-year increase in Microsoft’s fiscal fourth quarter cloud sales. CEO Satya Nadella attributed the surge to strong customer demand for AI capabilities hosted on Azure. Despite a sharp market selloff on concerns over AI spending and inflation, Microsoft’s shares rose more than 8% in after-hours trading following the earnings announcement.
Azure’s revenue milestone solidifies Microsoft’s position as a leading cloud provider, second only to Amazon Web Services. The cloud segment is a critical part of the infrastructure supporting the expanding AI industry. Microsoft’s results contrast with recent tech sector declines, which have been fueled by investor worries about the pace of returns from AI-related capital expenditures.
Microsoft’s fiscal year-end results highlight the growing importance of cloud and AI services in its business model. The company’s next earnings release is scheduled for October 24, when investors will assess whether Azure’s growth momentum continues amid evolving market conditions.