Microsoft tops Wall Street expectations, reports accelerating Azure growth and $37B AI run rate

Microsoft’s Azure cloud business accelerated in the March quarter, growing 40% and topping the company’s own forecast, giving the tech giant a new answer to questions about its ability to translate record capital spending on AI infrastructure into stronger financial results.

The company’s revenue rose 18% to $82.9 billion, beating the $81.4 billion analyst consensus, and earnings per share jumped 23% to $4.27, above the $4.06 expected by Wall Street. 

In its earnings news release, Microsoft also disclosed that its AI business has reached an annual revenue run rate of $37 billion, up 123% from a year ago. It’s the first time the company has updated the figure since it reported a $13 billion run rate in January 2025.

Capital spending came down to $30.9 billion from $37.5 billion the previous quarter. Microsoft had said the decline would come and that it reflected the timing of data center construction and hardware deliveries, not a slowdown in demand for cloud and AI services.

Shares were down more than 3% in after-hours trading.

The results come three months after Microsoft’s stock dropped 10%, wiping out $357 billion in market value in a single day, despite the company beating expectations on revenue and earnings. Investors focused on the record capital spending, a Copilot product that had reached just 3.3% of Microsoft 365’s commercial base, and a revenue backlog heavily dependent on OpenAI.

The OpenAI relationship has shifted significantly since then.

This week, the two companies restructured their partnership, with OpenAI ending its exclusive commitment to Microsoft’s Azure cloud and gaining the ability to run its products on other platforms. Microsoft, in turn, locked in its revenue-sharing arrangement and removed a clause that could have ended it if OpenAI declared it had achieved artificial general intelligence.

Developing story, more to come.