Microsoft beats analyst expectations as its annual cloud revenue hits $75 bn

Microsoft’s annual revenue for its flagship Azure cloud computing platform has surpassed $75 billion, up 34% from a year earlier. The Azure cloud business is the heart of Microsoft's efforts to shift its focus to artificial intelligence.

The software giant said its fiscal fourth-quarter profit was $34.3 billion, beating analyst expectations for $3.37 per share. It posted revenue of $76.4 billion in the April-June period, up 18 per cent from last year. Analysts polled by FactSet Research had been looking for revenue of $73.86 billion.

In spite of soaring profits, Microsoft has announced layoffs of about 15,000 workers this year. Promises of a leaner approach have been welcomed, especially as Microsoft and other tech giants are trying to justify huge amounts of capital spending to pay for the data centres, chips and other components required to power AI technology.

Microsoft CEO Satya Nadella told employees last week the layoffs were weighing heavily on him but also positioned them as an opportunity to reimagine the company's mission for an AI era.

At its earning call last week, Google said that it would raise its budget for capital expenditures by an additional $10 billion to $85 billion. Microsoft is expected to tread a similar path very soon.