NEW YORK: Microsoft’s quarterly profit surged past $36.6 billion as its cloud business fueled revenue growth, putting the spotlight on the company’s AI-driven expansion just days after it announced a voluntary buyout program for about 60,000 employees.
Revenue for the three months ended Sept. 30 rose 19% from a year earlier to $92.3 billion, while Microsoft Cloud revenue increased 30%. The results highlight strong demand for the company’s cloud services as it pours billions of dollars into artificial intelligence infrastructure.
Microsoft shares rose nearly 2.9% in after-hours trading in New York on Wednesday.
Cloud business drives earnings growth
Microsoft’s cloud division, which provides technology services to businesses and organizations, remained a key driver of its financial performance as companies increasingly adopt AI tools.
CEO Satya Nadella said AI development was accelerating adoption of the technology and delivering what he described as “real-world impact across every industry.”
The company also warned that substantial investments in AI and other uncertainties could affect its financial performance, underscoring the risks associated with its expansion.
The earnings report came days after Microsoft announced a voluntary buyout offer for eligible employees across teams in Canada, India, the United Kingdom and the United States.
The company said the program would give employees financial support and career-planning resources while helping Microsoft adapt its workforce to changing business needs. The company employs more than 220,000 people worldwide.
The planned buyouts come as Microsoft commits billions of dollars to the computing systems and data centers needed to develop and run AI technology.
Big tech faces questions over AI spending
Microsoft is among several major technology companies investing heavily in AI infrastructure as investors weigh whether the spending will deliver sustainable returns.
Major technology firms, including Amazon, Meta, Alphabet and Microsoft, are expected to spend more than $700 billion collectively this year on AI chips, data centers and related infrastructure.
Their latest financial results are drawing close scrutiny as investors look for evidence that the costly race to expand AI capabilities can translate into lasting revenue and profit growth.
Alphabet shares fall after earnings
Microsoft’s results contrasted with those of Alphabet, Google’s parent company, which reported weaker quarterly profit and signaled that heavy AI spending would continue.
Alphabet shares fell 9.75% on Wednesday after the company reported a 25% year-over-year decline in quarterly net profit.
The contrasting market reactions highlight the challenge facing technology companies: investing enough to compete in AI while convincing investors that the spending can support long-term growth without putting pressure on profitability.
