The tech giant’s revenue also grew 15 percent, but Wall Street is watching whether its investment in A.I. is paying off for its cloud computing business.
Microsoft closed its first full fiscal year of aggressive artificial intelligence investment with a mixed bag of results for people worried about how much big tech companies are spending on A.I.
Sales from April through June hit $64.7 billion, up 15 percent from the same period last year, the company reported on Tuesday. Profit rose 10 percent, to $22 billion.
The results beat Wall Street’s expectations and Microsoft’s own predictions. But the company’s cloud computing business did not grow as quickly as investors had expected, leading its share price to drop more than 6 percent in after-hours trading.
Azure, Microsoft’s flagship cloud computing product that includes A.I. services, grew 30 percent in the quarter after taking into account currency fluctuations. Investors had been hoping it would grow between 30 and 31 percent, as Microsoft had told them to expect.
The earnings report showed how the company is spending mightily to build the data centers and acquire the pricey chips that power A.I. technology. Microsoft’s capital expenses have grown every quarter since late 2022, when its chief executive, Satya Nadella, pushed his top executives to make big investments in A.I. Microsoft spent almost $19 billion on capital expenses last quarter, more than twice as much as two years earlier.
Investors have turned their attention to Microsoft’s spending after Alphabet, Google’s parent company, reported slowing growth and a 91 percent increase in capital expenses, prompting a sell-off in technology stocks last week.