Microsoft beats estimates as Azure grows faster than expected
Microsoft CEO Satya Nadella, left, departs from federal court in Washington, D.C., on Oct. 2, 2023.
Nathan Howard | Bloomberg | Getty Images
Microsoft shares moved as much as 2% lower in extended trading on Tuesday after the software maker issued fiscal second-quarter results that outdid analysts’ estimates and a light quarterly revenue outlook.
Here’s how the company performed, compared with consensus among analysts polled by LSEG, formerly known as Refinitiv:
- Earnings: $2.93 per share, vs. $2.78 per share expected
- Revenue: $62.02 billion, vs. $61.12 billion expected
With respect to guidance, Microsoft called for fiscal third-quarter revenue between $60 billion and $61 billion, or $60.50 billion at the middle of the range. Analysts polled by LSEG had expected $60.93 billion. But the company sees lower than expected cost of revenue and operating expenses during the quarter, based on consensus among analysts polled by StreetAccount.
Microsoft’s revenue increased 17.6% year over year in the quarter, which ended on Dec. 31, according to a statement. Net income, at $21.87 billion, or $2.93 per share, increased from $16.43 billion, or $2.20 per share.
The company’s Intelligent Cloud segment produced $25.88 billion in revenue, up 20% and above the $25.29 billion consensus among analysts surveyed by StreetAccount. The grouping contains Azure cloud infrastructure, SQL Server, Windows Server, Nuance, GitHub and enterprise services.
Within that segment, revenue from Azure and other cloud services grew 30%. Analysts polled by CNBC had expected 27.7% growth, and the StreetAccount consensus was 27.5%. The metric for the previous quarter was 29%. Six points of the Azure and other cloud services growth were tied to artificial intelligence, Amy Hood, Microsoft’s finance chief, said on a conference call with analysts.
Microsoft now boasts 53,000 Azure AI customers, and one-third of them are new to Azure in the past year, CEO Satya Nadella said on the call.
The number of commitments to spend in excess of $1 billion on Azure overall increased during the quarter, Nadella said.
Revenue from the Productivity and Business Processes unit including Office productivity software, LinkedIn and Dynamics totaled $19.25 billion. That was up 13% and higher than the $18.99 billion StreetAccount consensus.
The More Personal Computing segment contributed $16.89 billion in revenue, up about 19% and slightly more than the StreetAccount consensus of $16.79 billion. The segment comprises Windows, Surface, Bing and Xbox.
During the fiscal second quarter, Microsoft closed its acquisition of video game publisher Activision Blizzard, its largest deal ever. The company also announced custom cloud chips and started selling a $30 monthly Copilot AI add-on to Microsoft 365 productivity software bundles. But Nadella and Hood stopped short of sharing the number of clients that have started paying for the Copilot service.
“While it’s early days for Microsoft 365 Copilot, we’re excited about the adoption to date and continue to expect revenue to grow over time,” Hood said.
And layoffs continued in the quarter. Microsoft’s LinkedIn subsidiary cut around 700 jobs in October on top of the 10,000 announced earlier in the year. Last week, Microsoft said it’s eliminating around 1,900 employees in its gaming unit, or about 9% of headcount, following the Activision deal.
Notwithstanding the after-hours move, Microsoft shares have risen about 9% so far in 2024, while the S&P 500 index has gained 3% over that stretch.
WATCH: Microsoft briefly surpasses $3 trillion in market cap
An Amazon worker moves boxes on Amazon Prime Day in the East Village of New York City, July 11, 2023.
Spencer Platt | Getty Images
Amazon is extending its Prime Day discount bonanza, announcing that the annual sale will run four days this year.
The 96-hour event will start at 12:01 a.m. PT on July 8, and continue through July 11, Amazon said in a release.
For the first time, the company will roll out themed “deal drops” that change daily and are available “while supplies last.” Amazon has in recent years toyed with adding more limited-run and invite-only deals during Prime Day events to create a feeling of urgency or scarcity.
Amazon launched Prime Day in 2015 as a way to secure new members for its $139-a-year loyalty program, and to promote its own products and services while providing a sales boost in the middle of the year. In 2019, the company made Prime Day a 48-hour event, and it’s since added a second Prime Day-like event in the fall.
Prime Day is also a significant revenue driver for other retailers, which often host competing discount events.
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OpenAI CEO Sam Altman speaks during the Snowflake Summit in San Francisco on June 2, 2025.
Justin Sullivan | Getty Images News | Getty Images
OpenAI has been awarded a $200 million contract to provide the U.S. Defense Department with artificial intelligence tools.
The department announced the one-year contract on Monday, months after OpenAI said it would collaborate with defense technology startup Anduril to deploy advanced AI systems for “national security missions.”
“Under this award, the performer will develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains,” the Defense Department said. It’s the first contract with OpenAI listed on the Department of Defense’s website.
Anduril received a $100 million defense contract in December. Weeks earlier, OpenAI rival Anthropic said it would work with Palantir and Amazon to supply its AI models to U.S. defense and intelligence agencies.
Sam Altman, OpenAI’s co-founder and CEO, said in a discussion with OpenAI board member and former National Security Agency leader Paul Nakasone at a Vanderbilt University event in April that “we have to and are proud to and really want to engage in national security areas.”
OpenAI did not immediately respond to a request for comment.
The Defense Department specified that the contract is with OpenAI Public Sector LLC, and that the work will mostly occur in the National Capital Region, which encompasses Washington, D.C., and several nearby counties in Maryland and Virginia.
Meanwhile, OpenAI is working to build additional computing power in the U.S. In January, Altman appeared alongside President Donald Trump at the White House to announce the $500 billion Stargate project to build AI infrastructure in the U.S.
The new contract will represent a small portion of revenue at OpenAI, which is generating over $10 billion in annualized sales. In March, the company announced a $40 billion financing round at a $300 billion valuation.
In April, Microsoft, which supplies cloud infrastructure to OpenAI, said the U.S. Defense Information Systems Agency has authorized the use of the Azure OpenAI service with secret classified information.
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