Microsoft’s shares surge on fastest cloud growth since 2022

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Or sign-in if you have an account.Since ushering in the artificial intelligence boom with partner OpenAI, Microsoft has shifted its focus to AI models and software capable of acting autonomously. Photo by Matthias Balk/Picture Alliance via Getty ImagesMicrosoft Corp. shares soared after the company reported the fastest cloud growth in four years, suggesting its AI and computing services are making inroads with customers.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountAzure cloud revenue rose 43 per cent during the fiscal fourth quarter, the company said Wednesday in a statement. That was the fastest quarterly growth since early 2022 and topped analysts’ average estimate for a 40 per cent increase. Azure revenue surpassed US$100 billion for the first time during the fiscal year ended in June.Chief financial officer Amy Hood said she expected growth in the cloud unit to accelerate further in the current quarter, to about 45 per cent. “Demand continues to exceed available supply,” she said during a conference call with analysts.Canada's best source for investing news, analysis and insight.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Investor will soon be in your inbox.We encountered an issue signing you up. Please try againShe also indicated that Microsoft would hold the line on new capital spending this year, which helped send the shares up about 15 per cent to US$449.83 as the markets opened in New York, for the biggest intraday gain in more than six years.Since ushering in the artificial intelligence boom with partner OpenAI, Microsoft has shifted its focus to AI models and software capable of acting autonomously. These products require enormous computing power, and the company has joined an industrywide spending frenzy to build new data centres and buy the chips required to handle AI services.Capital expenditures — a key metric of data centre spending — increased 70 per cent to US$41 billion in the quarter. Analysts had expected US$42 billion.Hood said the company had determined that its data centres and office buildings would likely prove useful for an additional 10 years, a change that will shift some of the company’s capital expenditures to operating costs.The net effect: Microsoft’s capital spending will likely land at roughly US$175 billion this year, versus a prior forecast of US$190 billion. But outside of that accounting tweak, the company’s 2026 investment expectations “remain unchanged,” Hood said.That could ease investor concerns about the company’s massive outlays on data centres and chips even as investors continue to question the spending by some of Microsoft’s peers.Google parent Alphabet Inc. last week raised its spending outlook, and Meta Platforms Inc. on Wednesday increased the low end of its own forecast for capital expenditures. Both saw their shares fall.Microsoft chief executive Satya Nadella said the company now counted more than 30 million paid users of Microsoft 365 Copilot, the AI assistant sold as an add-on to the ubiquitous Office software. That is up from roughly 20 million three months earlier.The step-up in paid Copilot users is a good result, Bloomberg Intelligence analyst Mandeep Singh said in an interview on Bloomberg TV. “The bundling strategy that Microsoft has continues to work.”Total revenue increased 18 per cent to US$90 billion, beating average estimates for US$87.7 billion. Profit was US$4.81 per share, compared with a per-share estimate of US$4.25. That included a 33 cents U.S.-a-share boost from the value of the Microsoft’s investment in AI lab Anthropic PBC.—With assistance from Brody Ford.We apologize, but this video has failed to load.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.