Microsoft delivered a solid quarterly result overnight, a slight beat vs expectations on nearly all key metrics. The stock is down ~2% in after-hours trade, and our only thought here is YoY sales growth in their Azure cloud segment may not have beat by enough.
1Q Highlights
- Revenue: US$82.9bn vs $US81.46bn consensus
- Microsoft Cloud revenue: US$54.5bn vs $53.78bn consensus
- Azure and cloud services revenue growth +39% vs. +38.2% consensus
The core business remains in great shape as Microsoft 365 continues to compound globally. Cloud remains the key earnings engine, though the debate for investors is less about growth and more about whether Azure is accelerating fast enough to meet the very high expectations embedded in AI-related spending.
Microsoft’s AI business has now surpassed a US$37bn annual revenue run-rate, up 123% year-on-year, highlighting the scale of the opportunity as enterprise adoption accelerates. The stock remains one of the best positioned global beneficiaries of the AI build-out, and with the shares still trading ~20% off its October 2025 highs, it looks attractively priced.
MM remains long and bullish MSFT
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