Microsoft's AI & Cloud Boom Drives 25% Profit Surge, $4T Valuation
Microsoft has reported a significant surge in its profits, driven by a booming cloud computing business and substantial investments in artificial intelligence. The US tech giant’s net income climbed 24% to $27.2 billion for the quarter ended June 30, 2025, with diluted earnings per share reaching $3.65, also up 24% year-over-year. Revenue for the period increased by 18% to $76.4 billion, exceeding analyst expectations. This strong performance has propelled Microsoft’s valuation to surpass the $4 trillion mark in after-hours trading, making it only the second company to achieve this milestone, following Nvidia.
The Intelligent Cloud segment, which includes the Azure cloud platform, was a primary driver of this growth, with its revenue increasing by 26% to $29.9 billion. Notably, Microsoft disclosed Azure’s standalone annual revenue for the first time, revealing it surpassed $75 billion for the fiscal year, a 34% increase from the prior year. This growth was attributed to “growth across all workloads,” according to Microsoft CEO Satya Nadella, highlighting not only AI demand but also broader expansion. Azure and other cloud services revenue specifically surged by 39% in the fourth fiscal quarter.
Microsoft’s commitment to artificial intelligence is evident in its aggressive spending plans. The company plans to invest a staggering $120 billion in AI next year. This translates to a projected capital expenditure exceeding $30 billion in its fiscal first quarter, a significant increase from $20 billion a year earlier, as Microsoft works to expand its data center capacity to meet the surging demand for AI services. CFO Amy Hood emphasized that this spending is correlated with “contracted, on-the-books business,” indicating a strategic and justified investment in infrastructure.
Beyond cloud and AI, other segments also contributed to Microsoft’s strong quarter. Revenue in Productivity and Business Processes, which includes Microsoft 365 and LinkedIn, increased by 16%. Microsoft 365 Commercial cloud revenue grew by 18%, and LinkedIn revenue saw a 9% increase. The More Personal Computing segment, encompassing Windows, Surface, Xbox, and Bing, also experienced growth, with Xbox content and services revenue rising by 13%.
For the full fiscal year 2025, Microsoft’s total revenue reached $281.7 billion, a 15% increase, with net income of $101.8 billion, up 16%. Microsoft returned $9.4 billion to shareholders in the form of dividends and share repurchases during the fourth quarter. The company’s robust financial performance and strategic focus on cloud computing and AI position it strongly for continued growth in the evolving technology landscape.