Microsoft has beaten analysts’ expectations for revenue and earnings in its first quarter of fiscal 2027, as strong growth in its Azure cloud computing business helped ease investor concerns over heavy spending on artificial intelligence (AI) infrastructure.
The company reported earnings of $4.89 per share on revenue of $92.28 billion, surpassing analysts’ forecasts of $4.72 per share and revenue of $90.61 billion.
Microsoft shares rose nearly 2.5% in after-hours trading following the results, as investors welcomed stronger-than-expected Azure growth and lower-than-expected capital expenditure.
Azure revenue increased by 48% year on year, while Microsoft Cloud revenue rose 31% in constant currency to $63.9 billion during the quarter.
Azure has become a central driver of Microsoft’s growth, having generated more than $100 billion in revenue during the company’s 2026 fiscal year.
Ryan Lee, senior vice-president of product and strategy at Direxion, said Azure’s performance demonstrated progress in Microsoft’s efforts to monetise AI.
“The all-important Azure growth rate beat expectations, signifying MSFT’s AI monetisation efforts have progressed well,” he said, adding that the results could support broader investor interest in AI-related stocks.
Microsoft’s performance comes amid growing scrutiny of the billions of dollars technology companies are investing in AI infrastructure, including the hardware and software required to support the computing power needed to develop and train AI systems.
Concerns have also mounted over the debt companies are issuing to finance large-scale infrastructure projects, contributing to a sell-off in government debt in the United States and other markets.
Microsoft established an early position in the AI boom through its investment in OpenAI, the developer of ChatGPT. It has since expanded its AI portfolio through the development of its own models, diversification of cloud infrastructure, introduction of AI agents and integration of AI capabilities into its core products.
The company has also become one of the major AI hyperscalers, alongside Meta Platforms, Alphabet, Amazon and Oracle, as it invests heavily in building and operating large-scale data centres.
In the previous quarter, Microsoft was the only company among the group not to increase its capital expenditure forecasts.
Steve Sosnick, chief strategist at Interactive Brokers, said stronger Azure revenue and capital expenditure that was significantly lower than expected had contributed to Microsoft’s earnings beat.
He told Investing.com that investors were still awaiting concrete guidance on the company’s performance in the next quarter and beyond, but said the results provided reasons for optimism.
Microsoft chief executive Satya Nadella said the company was delivering greater capabilities, choice, control and cost efficiency across its technology offerings.
He added that helping organisations build and own their own intelligence, while maintaining trust through the safety and security of AI agents, was supporting adoption and practical applications across industries.
