Azure shows strong AI demand
Microsoft reported fiscal third‑quarter results showing Azure growth of about 39% and an EPS beat of $4.14, with reports citing a roughly $625 billion compute backlog tied to AI demand. Analysts say cloud infrastructure is easier to monetise right now than end‑user AI products, a split that shows up in Microsoft’s numbers. (blockonomi.com) (seekingalpha.com)
Microsoft’s latest numbers show that selling the computing behind artificial intelligence is paying off faster than selling the assistants people actually use. (microsoft.com) For the quarter ended December 31, 2025, Microsoft reported $81.3 billion in revenue and non-Generally Accepted Accounting Principles diluted earnings per share of $4.14 on January 28, 2026. Azure revenue grew 39% in constant currency, while Microsoft Cloud revenue reached $51.5 billion, up 26%. (microsoft.com) The company’s commercial remaining performance obligation — a measure of signed business not yet booked as revenue — rose to $625 billion, according to Microsoft’s earnings call transcript. Microsoft executives said more than half of that backlog is due within 12 months. (microsoft.com) That backlog matters because Azure is the rented computing layer for training and running artificial intelligence models, and demand is still outrunning supply. Chief financial officer Amy Hood said on the January 28 call that Microsoft remained “AI capacity constrained” in the quarter. (microsoft.com) The split inside Microsoft’s artificial intelligence business is visible in the same report. Satya Nadella said Microsoft now has an annual artificial intelligence revenue run rate above $13 billion, up 175%, while the company separately said it had more than 15 million paid seats for Microsoft 365 Copilot. (microsoft.com) (cnbc.com) Investors still sold the stock after the release because Azure’s 39% growth was only slightly ahead of expectations and below the prior quarter’s 40% pace, while capital spending hit $37.5 billion. Shares fell about 6.8% in extended trading on January 28, according to market reports. (blockonomi.com) (cnbc.com) Analysts have argued that this is the easier part of the artificial intelligence business to monetize. Bank of America analyst Tal Liani said Microsoft’s artificial intelligence-related backlog had reached about $625 billion and tied that demand to Azure infrastructure and software contracts. (blockonomi.com) The harder part is turning consumer and workplace assistants into profit at the same speed as cloud rentals. Seeking Alpha’s analysis said Azure is “booming” while OpenAI exposure and Copilot economics are limiting upside, a view that matches Microsoft’s own mix of fast infrastructure growth and still-early user adoption. (seekingalpha.com) (microsoft.com) Microsoft’s next scheduled earnings release is April 29, 2026, and investors will be watching whether Azure growth re-accelerates as more data center capacity comes online. For now, the company’s clearest artificial intelligence payoff is still the meter running inside its cloud. (microsoft.com)
