Microsoft revenue crosses $76 billion in Q4; Azure beats expectations, Windows grows, and AI tools now has 100 million users: Key highlights from how Microsoft performed in FY 2025
delivered stronger-than-expected fiscal fourth-quarter results with $76.4 billion in revenue, an 18% year-over-year increase, and $27.2 billion in net income, marking a 24% jump from the previous year. In addition to that, the company has also announced a record-breaking $30 billion capital expenditure plan for the upcoming quarter during its earnings call, driven by surging demand for artificial intelligence services.
The company's Azure cloud platform crossed a major milestone, surpassing $75 billion in annual revenue for the first time with 39% growth year-over-year. This unprecedented spending spree positions Microsoft to potentially outpace rivals Amazon and Google in the fierce competition for AI infrastructure dominance.
Azure cloud business crushes expectations with 39% growth surge
Microsoft's cloud division emerged as the standout performer, with Azure revenue jumping 39% compared to analyst estimates of 34.75%. CEO Satya Nadella emphasised that Azure's growth was "driven by growth across all workloads," not just AI applications. The company projects continued momentum with 37% growth expected for the current quarter, well above analyst predictions of 33.5%.
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Chief Financial Officer Amy Hood revealed that over half of the $24.2 billion spent in the recently completed quarter went toward long-lived assets designed to support monetisation for 15 years or more, while the remainder focused on CPUs and GPUs for AI workloads. "I feel very good that the spend that we're making is correlated to basically contracted, on-the-books business that we need to deliver," Hood stated during the investor call.
Gaming division shows mixed results despite Xbox Game Pass milestone
Microsoft's gaming segment delivered a complex performance picture, with overall gaming revenue up 10% year-over-year while hardware sales declined 22%. Xbox content and services revenue grew 13%, driven primarily by first-party game launches and Xbox Game Pass subscriptions.
In a significant disclosure, Nadella revealed that Xbox Game Pass annual revenue reached nearly $5 billion for the first time, highlighting the success of Microsoft's subscription gaming strategy. The company's cross-platform approach is paying dividends, with Microsoft becoming "the top publisher on both Xbox and PlayStation this quarter" after bringing previously exclusive titles like Forza Horizon 5 and Indiana Jones and the Great Circle to Sony's platform.
Surface and Windows revenue grows amid PC market recovery
Microsoft's Windows and devices segment showed modest growth of 3% year-over-year, driven primarily by
Windows OEM revenue
as businesses refresh their PC fleets ahead of Windows 10's end of support in October. The company launched two new Surface devices during the quarter, the 12-inch Surface Pro and 13-inch Surface Laptop, though CFO Amy Hood cautioned that devices revenue is expected to decline next quarter alongside a Windows OEM revenue drop in the "mid to high single digits."
The PC market recovery reflects broader industry trends, with Gartner reporting PC shipments up more than 4% in the recent quarter thanks to a Windows 11 refresh cycle for desktop computers. Microsoft primarily monetises Windows through OEM licensing fees paid by laptop and PC manufacturers, making this segment sensitive to overall PC market health.
AI tools reach 100 million users as competition intensifies
Microsoft's Copilot AI applications surpassed 100 million monthly active users across commercial and consumer offerings, though this figure trails Google's Gemini app, which boasts 450 million monthly active users. The company now claims more than 800 million monthly active users of AI-powered features across all its products.
The massive capital investments come amid workforce reductions totalling over 15,000 cuts since May, creating what Nadella described as "uncertainty and seeming incongruence" between financial success and layoffs. The company maintains 228,000 full-time employees as of June 30, the same headcount as 2024 before recent cuts.
Microsoft's aggressive AI spending comes as the entire industry race to capture the artificial intelligence market, with the company positioning itself just $200 billion short of becoming only the second company to achieve a $4 trillion valuation.
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