- Microsoft beat across the board. Revenue for the quarter ended September rose about 19% to $92.28 billion, above the $90.69 billion LSEG estimate, and adjusted EPS climbed 32% to $4.92 versus $4.73 expected. Shares rose about 3% in after-hours trading, putting them in record-high territory.
- Azure accelerated again. Cloud revenue grew 48% to $33.17 billion from $22.38 billion a year earlier, beating FactSet estimates of about 44% and management’s guidance of roughly 45%, and the company added 24 data centers across five continents during the quarter.
- Spending came in well below expectations. Capital expenditures including finance leases were $45.2 billion, compared with the $51 billion analysts had forecast and the $50 billion management projected, a gap of about $5.8 billion versus analyst forecasts (Lumida calculation), partly because third-party data center capacity arrived late.
- The outlook was slightly better than expected. Microsoft guided current-quarter revenue to $96 billion to $97.1 billion versus the Street’s $95.6 billion and expects Azure to grow about 49% to 50% in constant currency, above the roughly 46% FactSet consensus, while trimming its calendar-year capex plan to $170 billion from $175 billion.
What Happened?
Microsoft reported fiscal first-quarter results Wednesday after the close. CEO Satya Nadella said Copilot daily users rose 50% from a year earlier, and the company bought back $2.9 billion of stock in the quarter. Microsoft said GPU efficiency gains let it allocate more capacity to customers while increasing revenue per token. The CNBC Investing Club raised its price target to $580 from $550, noting the stock gained roughly 51% from its late-June low through Wednesday’s close.
Why It Matters?
Microsoft is showing investors the combination they now reward most: fast AI-driven cloud growth without burning through free cash flow. That contrast was stark on a night when Alphabet missed and slid about 10%. The flip side of lower capex is weaker near-term demand signals for the suppliers and neocloud partners Microsoft relies on, and CFO Amy Hood said the company “will access additional sources of funding when we believe it is attractive to do so,” which leaves the door open to new financing.
What’s Next?
Watch whether the third-party capacity delays ease and how much of the deferred spending lands in coming quarters, with Microsoft planning more than $50 billion of capex in the current quarter. Investors will also track Copilot paid-seat disclosures and how Microsoft trades Thursday in a tech tape pressured by misses from Alphabet, ServiceNow and Fortinet.
Affected Tickers and Coins: MSFT, GOOGL, CRWV, NBIS
Source: CNBC Investing Club, CNBC
