Quarterly Financial Highlights

Microsoft delivered a solid earnings report with $81.3 billion in revenue for the quarter, up 17 percent, and net income of $38.3 billion, up 21 percent. Cloud revenue surpassed $50 billion, marking a record for the company.

Capital Expenditure and AI Investment

The company has spent almost as much on capital expenditures in the first half of the current fiscal year as it did in the entire previous year. Microsoft spent $88.2 billion on capital expenditures last year and has spent $72.4 billion so far this year. Much of this spending is directed toward AI infrastructure for enterprises and major AI labs, including OpenAI and Anthropic.

Investor Concerns and Management Response

Investors expressed worry that Azure and Microsoft 365 did not grow as quickly as expected. One analyst wrote, "The fact that BOTH Azure and the M365 segments fell a bit short is the key negative we’re hearing." Despite this, Nadella spent much of the earnings call promoting AI usage, asserting that demand for AI services across products far outstrips data‑center supply.

Copilot Growth Across Products

Nadella claimed daily users of consumer Copilot AI products had grown "nearly 3x year‑over‑year," encompassing AI chats, news feed, search, browsing, shopping, and operating‑system integrations. While the exact user count was not disclosed, Microsoft previously reported surpassing 100 million monthly active Copilot users, counting both commercial and consumer users.

GitHub Copilot now has 4.7 million paid subscribers, up 75 percent year‑over‑year. Microsoft 365 Copilot reported 15 million paid seats from corporate customers, out of a base of 450 million paid seats. The company also highlighted Dragon Copilot, its healthcare AI agent, which is available to 100,000 medical providers and was used to document 21 million patient encounters over the quarter, a three‑fold increase year‑over‑year.

Outlook

Nadella and CFO Amy Hood emphasized that the substantial investment in data‑center capacity is intended to meet burgeoning AI demand, suggesting confidence that the spending will convert into broader usage and profitability in the future.

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