In This Story
Microsoft’s (MSFT-0.29%) fiscal first quarter results exceeded Wall Street’s expectations thanks to the “AI-driven transformation.”
The tech giant reported revenues of $65.6 billion for the first quarter of fiscal year 2025 — a 16% increase from the previous year. It reported net income was up 11% at $24.7 billion, and earnings per share, or EPS, was up 10% at $3.30.
Microsoft Cloud reported revenues of $38.9 billion, a 22% increase year over year, Amy Hood, chief financial officer of Microsoft, said, due to “[s]trong execution” by Microsoft’s sales teams and partners.
“AI-driven transformation is changing work, work artifacts, and workflow across every role, function, and business process,” Satya Nadella, Microsoft’s chief executive, said in a statement. “We are expanding our opportunity and winning new customers as we help them apply our AI platforms and tools to drive new growth and operating leverage.”
The company’s shares were up 0.13% at the market close on Wednesday and were up 1.7% during after-hours trading. The company’s stock has climbed 16.6% so far this year.
Microsoft was expected to report revenues of $64.57 billion for the fiscal first quarter, according to analyst estimates compiled by FactSet (FDS-1.02%). Its Intelligent Cloud unit was expected to report $26.8 billion, according to the same estimates. The company was expected to report earnings per share, or EPS, of $3.11.
Microsoft’s revenue expectations were below the $64.7 billion it reported for the fourth quarter of fiscal year 2024. Despite beating Wall Street’s expectations, its shares fell after its fourth-quarter results due to its Intelligent Cloud unit sales of $28.7 billion coming in below expectations.
Investors were focused on the potential growth of Microsoft’s Azure platform in the fiscal first quarter, as well as “reaffirmation of guidance for Azure to reaccelerate” in the second half of the fiscal year, analysts at Jefferies (JEF-2.69%) said in a note on Tuesday. The analysts said they “expect AI contribution to Azure growth to increase” and that checks pointed to “continued strong demand for Azure AI services with more AI capacity added.”
“We will want to see signs supporting strong adoption of MSFT’s Copilots and traction towards its $10B AI ARR goal, which we believe it could hit in the next couple quarters,” Jefferies analysts said. “Additionally, we will want to see continued signs of AI’s broader Halo effect across the business.”