For years, Microsoft told investors how fast Azure was growing but not how big it actually was. That changed on Wednesday. In its fiscal first-quarter results, Microsoft disclosed Azure’s revenue in dollars for the first time: about $33.2 billion for the three months ended September 30, up 48% from a year earlier.

Here are the key takeaways, drawn from CNBC, TechCrunch and Microsoft’s own release.

The headline numbers

  • Total revenue: $92.28 billion, up 19% year over year, ahead of the roughly $90.69 billion analysts expected, per LSEG figures cited by CNBC
  • Adjusted earnings per share: $4.89, versus $4.73 expected
  • Azure revenue: about $33.17 billion, up 48%, compared with growth of 42% in the June quarter
  • Net income: $36.63 billion, up from $27.75 billion a year earlier

CNBC reported that Azure is now Microsoft’s biggest single business, representing roughly a third of total revenue. Shares rose about 4% in extended trading after the report.

Demand still outruns supply

The most telling comment came from chief financial officer Amy Hood. “We still have demand that exceeds supply,” she said on the call with analysts.

Microsoft reported $45.2 billion in capital expenditures and finance leases in the quarter, up about 30% from a year earlier but below what analysts had projected. Hood said some expected third-party capacity deliveries were delayed, pushing spending into the second half of the fiscal year. She said the company is aiming for more than $50 billion in capex and finance leases in the current quarter.

About 75% of capital spending is now tied to short-lived assets such as CPUs and GPUs, up from around half a year ago, according to CNBC. That shift signals Microsoft is prioritizing hardware it can turn into revenue quickly.

For the current quarter, Microsoft guided to revenue of $96 billion to $97.1 billion and Azure growth of 49% to 50% in constant currency.

A new way of reporting

The results also introduced a new structure. After 11 years with three segments, Microsoft now reports two: Agents and Infra, and Devices and Consumer.

Agents and Infra, which includes Azure, Microsoft 365 cloud products and server licensing, grew almost 25% to $76.8 billion. Devices and Consumer, which covers Windows licensing, Xbox, devices, search and advertising, slipped 3% to $15.48 billion. Sales of devices and Windows licenses fell 22%, which the company linked to higher memory and storage prices, weak PC demand and the end of Windows 10 support last year.

Copilot and OpenAI

CEO Satya Nadella said the number of people using Microsoft 365 Copilot rose 50% from the previous quarter, though the company did not disclose paid seats. TechCrunch also reported that Microsoft recorded $10 billion in revenue from OpenAI, a reminder of how intertwined the two companies remain.

The cost side of the AI boom

Free cash flow fell 27% to $18.63 billion as data center spending climbed. CNBC noted that Microsoft still generates positive free cash flow, unlike some rivals that have reported negative cash flow during the AI build-out. Hood said Microsoft will keep generating free cash flow through fiscal 2027 but could tap debt markets when it is attractive to do so.

The quarter followed Microsoft’s announcement earlier in the week that it is offering voluntary buyouts to up to 60,000 employees as it tries to balance AI spending with efficiency.

Why it matters

Disclosing Azure in dollars gives investors and competitors a clearer yardstick for the cloud race. A $33 billion quarter growing near 50% shows that enterprise demand for AI computing is still accelerating, and that the main constraint is not customers but chips, power and data center capacity.

The bottom line

Microsoft’s first look under Azure’s hood revealed a business that is huge, growing fast and limited mainly by how quickly new capacity comes online. Expect spending to accelerate further, and expect every cloud rival’s next earnings call to be measured against that $33.2 billion figure.

Image: Data center infrastructure in the United States by DOE/National Renewable Energy Laboratory (NREL) via Wikimedia Commons, Public Domain Mark 1.0