Microsoft sails past estimates as Q1 cloud revenue soars 33%

Microsoft (NASDAQ:MSFT) easily eclipsed consensus estimates in its first quarter fiscal 2025 financial report as its Azure cloud segment crushed expectations.

Microsoft shares ticked up about 1% during early post-market trading on Wednesday.

“Microsoft reported another strong quarter in FQ1, but the stock is stuck in the $430 range due to the stretched valuation,” said Stone Fox Capital, Investing Group Leader for Out Fox The Street. “The tech giant reported strong 16% growth for a company with $65B in quarterly revenue, but the stock already trades at 32x FY25 EPS targets.”

For the quarter ended September 30, Microsoft reported adjusted earnings per share of $3.30 versus the consensus estimate of $3.10. Revenue climbed 16% year over year to $65.6B. Estimates called for revenue of $64.56B.

“On the face of it, it’s an excellent quarterly performance from Microsoft,” said Seeking Alpha analyst Vinay Utham. “Although both revenues and EPS beat street estimates, the biggest takeaway for me is the growth seen in Azure, which came in at 33%, smashing street estimates of 29.4%.”

Microsoft cloud revenue totaled $38.9B for the quarter, versus the estimate of $38.1B.

“The growth in Azure was also higher than the 29% growth registered in the last quarter,” Utham added. “The Productivity and Business Processes segment also contributed significantly to the overall revenues, coming significantly ahead of street estimates.”

“AI-driven transformation is changing work, work artifacts, and workflow across every role, function, and business process,” said Microsoft CEO Satya Nadella. “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.”

“AI’s contribution was steadily increasing in the last three quarters, and in the last quarter, AI contributed 8% to overall growth of Azure,” Utham said. “The expectation is that AI has contributed higher than 8% in the current quarter.”

Microsoft is holding an earnings call at 5:30 p.m. ET.