Microsoft net income jumps 60% to $38.5B as AI and cloud investments climb, but shares dip on investor caution
SAN FRANCISCO: Microsoft reported a sharp rise in quarterly profit but saw its shares slide as a massive surge in artificial intelligence spending unsettled investors.
Net income for the last quarter of 2025 jumped 60% to $38.5 billion, beating expectations on revenue of $81.3 billion.
This compared to a profit of $24.1 billion on revenue of $69.6 billion a year earlier.
However, shares in the cloud and software giant sank about 5% in after-hours trading.
Investors are closely watching capital expenditures as Microsoft spends heavily in the AI race against rivals Google, Amazon and Meta.
The company said capital expenditures, largely for AI and cloud infrastructure, grew by 66% to $37.5 billion.
Analysts expressed worry that a sizeable chunk of Microsoft’s expected revenue is tied to OpenAI, which some feel is overspending.
Microsoft now holds a 27% stake in OpenAI, the world’s most valuable private company with a $500 billion valuation.
The company said about 45% of its remaining cloud commitments are from OpenAI.
OpenAI is the leader in generative AI but must raise billions yearly to cover huge computing and talent costs.
Azure and other cloud services, Microsoft’s most watched segment, saw revenue surge 39%, roughly in line with expectations.
Demand for cloud services continues to exceed available supply, the company said.
With this earnings result, “Microsoft didn’t declare victory on AI—but it made a credible case that the spending has a path to payback,” said Emarketer principal analyst Jeremy Goldman.
The LinkedIn professional network saw revenue grow 11%.
Revenue from Xbox gaming content and services decreased 5%, while hardware sales for Xbox were down 32%.
