Here’s how the company did in comparison with Wall Street expectations, based on a survey of analysts by LSEG:
- Earnings per share: $3.23 vs. $3.11 expected
- Revenue: $69.63 billion vs. $68.78 billion expected
Microsoft’s revenue grew 12.3% year over year in the quarter, which ended on Dec. 31, according to a statement. That represents the slowest growth since mid-2023. Net income of $24.11 billion was up from $21.87 billion in the same quarter a year ago.
The company’s Intelligent Cloud segment, which contains the Azure cloud, contributed $25.54 billion in revenue. That was up about 19% but below the $25.83 billion consensus among analysts polled by StreetAccount.
Revenue from Azure and other cloud services jumped 31%, down from 33% in the prior quarter. Microsoft now has a $13 billion annualized revenue run rate for artificial intelligence, CEO Satya Nadella was quoted as saying in the statement.
Of the growth in the fiscal second quarter, 13 percentage points came from artificial intelligence. Microsoft does not disclose Azure revenue in dollars. Analysts polled by CNBC and StreetAccount had been looking for 31.9% and 31.1% growth, respectively.
Microsoft’s Productivity and Business Processes segment, which includes Office productivity software subscriptions and LinkedIn, posted $29.44 billion in revenue. That was up 13.9% and more than StreetAccount’s $28.89 billion consensus.
The More Personal Computing unit, which includes Windows, Bing, Surface and Xbox, delivered $14.65 billion in revenue. The number was flat year over year and higher than the StreetAccount consensus of $14.29 billion.
Sales of devices and of Windows operating system licenses from device makers were up 4%. Technology industry researcher Gartner estimated that the PC shipments increased 1.4% in the quarter.
The company reported $15.80 billion in fiscal second-quarter capital expenditures, excluding finance leases. The consensus among analysts polled by Visible Alpha was $15.70 billion.
Microsoft had $2.29 billion in its “other expense” line item. In October Amy Hood, the company’s finance chief, had projected $1.5 billion in “other expense,” mainly because of Microsoft’s share of expected losses at OpenAI, in which Microsoft has invested nearly $14 billion to date.
During the fiscal second quarter, Microsoft announced the Windows 365 Cloud Link, a PC that corporate workers can use to access their applications and files stored in the cloud. The company’s GitHub unit announced support for artificial intelligence models from Anthropic and Googleinvested an additional $750 million into OpenAI during the quarter.
Microsoft shares slipped 2% on Monday as investors considered the implications of AI models from DeepSeek, a Chinese lab. DeepSeek in December introduced an open-source model that the lab said it trained for $5.6 million, excluding costs of data and earlier research. That would make it more efficient than models from major U.S. companies. And last week, DeepSeek said its newest model, R1, outperformed OpenAI’s in some tests.
“We should take the developments out of China very, very seriously,” Nadella said Jan. 22. Nadella has committed to spending $80 billion on AI infrastructure in the current fiscal year.
Before the earnings release, Microsoft shares were up 5% so far in 2025, while the S&P 500 index had gained about 3% in the same period.
Executives will discuss the quarterly results with analysts and issue guidance on a conference call starting at 5:30 p.m. ET. Analysts might ask management why Microsoft did not participate in a Jan. 21 White House press conference for the Stargate AI infrastructure project involving OpenAI that could attract up to $500 billion in investment.
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