Microsoft’s Azure Growth Drives Strong Fiscal Third-Quarter Earnings
Microsoft’s focus on its Azure cloud-services platform is paying off, with the company reporting a significant surge in Azure revenue during its fiscal third quarter. The software giant’s Azure revenue rose 33% year over year, with artificial intelligence contributing 16 percentage points to this growth, up from 13 points in the previous quarter.
Chief Executive Satya Nadella highlighted the importance of cloud and AI in driving business growth, stating, “Cloud and AI are the essential inputs for every business to expand output, reduce costs and accelerate growth.” He noted that customers across various industries, including Abercrombie & Fitch, Coca-Cola, and ServiceNow, are expanding their Azure footprints.
Looking ahead, Microsoft expects continued growth in cloud and AI services, with Azure growth projected at 34% to 35%. The company’s strong performance in cloud services is expected to more than offset near-term uncertainty in its hardware business, according to Chris Versace, lead portfolio manager for TheStreet Pro Portfolio.
The cloud-computing market is poised for significant growth, with revenue expected to reach $2 trillion by the end of the decade. Generative AI is forecast to account for about 10% to 15% of cloud spending, representing a substantial opportunity for Microsoft and other cloud providers.
Microsoft’s strong Azure growth has positioned the company well to benefit from the rising demand for large AI models. The company’s cloud-based offerings and broad base of enterprise customers are expected to drive continued growth and success.
