Microsoft has released its latest quarterly earnings results, with its cloud unit surpassing estimations.
During the company's earnings call - billed as FY24 Q3 - CEO Satya Nadella revealed that Microsoft Cloud has surpassed $31.8 billion in revenue for the quarter, up by 24 percent YoY.
Following the earnings call, shares in Microsoft increased by four percent, bringing the company's stock market value to $128 billion. Total revenue for the company rose 17 percent to $61.9 billion.
Nadella puts this strong revenue growth in its cloud division down to more companies migrating workloads to Azure, its widespread cloud regions, and its artificial intelligence (AI) offerings.
"We have the most comprehensive cloud footprint with more than 60 data center regions worldwide, as well as the best AI infrastructure for both training and inference. And we also have our AI services deployed in more regions than any other cloud provider," Nadella said.
The company has also announced the availability of H100 virtual machines this quarter, which Nadella positions as a contributing factor.
Nadella added: "We continue to see more cloud migrations with Azure Arc. We are meeting customers where they are, helping them run apps across on-prem, edge, and multi-cloud environments. We now have 21,000 Arc customers, up 140 percent year over year. We are the only other cloud provider to run Oracle's database services, making it simpler for customers to migrate their on-prem Oracle databases to our cloud."
Microsoft CFO Amy Hood reinforced this, noting that "higher-than-expected AI consumption contributed to revenue growth in Azure."
In addition, Hood said that commercial bookings for the company have increased by 14 and 17 percent which is "in line with expectations" and is supported by "continued growth in the number of $10 million-plus contracts for both Azure and Microsoft 365."
Microsoft's Intelligent Cloud segment also saw notable growth, with revenue of $24.3 billion, increasing 19 percent. "Overall, server products and cloud services revenue grew 21 percent. Azure and other cloud services revenue grew 29 percent and 28 percent in constant currency, including roughly 3 points from AI services," Hood added.
While the revenue results were positive, Microsoft's cloud unit was also a source of significant CapEx.
CapEx reached $11.2 billion in the quarter to "support cloud demand, including investments to scale our AI infrastructure." Microsoft expects this to continue to increase sequentially and to be driven by the company's spend on cloud and AI infrastructure.
It was reported earlier this month that Microsoft has more than 5GW of data center capacity at its disposal, and is planning to double it. This has followed several major investment plans announced by the cloud giant, including $3.44bn to double its AI infrastructure and cloud computing capacity in Germany, and $2.1bn in Spain. The company has also invested $1.5bn in UAE AI firm, G42.
As for the future, Microsoft is anticipating Azure to continue growing by between 26 and 27 percent with an "increasing contribution from AI." Hood notes that this is in part because "AI workloads don't just use our AI services. They use data services and they use other things. And so, that combination, I think, looking on a competitive basis, we feel good about our execution, we feel good about taking share, and we feel good about consistent trends."
