Microsoft Sees Azure Growth Hitting 50% as Spending Surges

Azure could grow as much as 50% in the December quarter, Microsoft forecast, while its spending on infrastructure is set to exceed $50 billion. Together, the numbers capture the bet investors are weighing: demand for cloud services is racing ahead, but building the data centers to meet it takes enormous sums. ⁴

The forecast follows a strong September quarter. Microsoft reported $92.28 billion in revenue, up 19% from a year earlier and above analysts’ expectations. Its Azure cloud business grew 48%, while Microsoft Cloud revenue reached $63.9 billion, up 30%. The company also reported $36.6 billion in profit. Azure provides online computing services that businesses use to run software and build AI tools, making its growth a key measure of demand for Microsoft’s infrastructure. ^2,8

The forecast of more than $50 billion in spending matters because investors are questioning whether big technology companies can earn enough from AI investments to justify the cost. Microsoft spent $45.2 billion on capital projects in the September quarter, including finance leases, below some expectations. That single-quarter figure does not necessarily mean the company is building less: analysts cited the timing of leases and data centers waiting to be powered as possible reasons for swings. Microsoft’s commercial backlog, or contracted work not yet counted as revenue, rose 73% year on year to about $677 billion. ²

That backlog gives Microsoft a large pipeline of promised business, but turning it into sales depends on having enough computing capacity. The company has also offered voluntary buyouts to about 60,000 employees, roughly a quarter of its workforce, while investing heavily in AI. The next test is the December quarter: Microsoft will report whether Azure’s growth approaches its 50% forecast and how much it spends to meet that demand. ^3,4