Microsoft announced impressive financial results for the fourth quarter of fiscal year 2025. The company earned $76.4 billion in revenue, a growth of 18% from last year, and $27.2 billion in net profit, which is 24% higher than the previous year.
Huge Investment in AI
Microsoft also revealed it plans to spend a record $30 billion in the upcoming quarter. This money will go toward building AI infrastructure, as demand for AI tools continues to grow.
Azure Cloud Grows Stronger
Microsoft’s cloud platform, Azure, performed extremely well. It earned $75 billion annually for the first time, showing a 39% growth year-over-year — beating market expectations. CEO Satya Nadella said this growth came from a wide range of services, not just AI.
For the next quarter, Microsoft expects Azure to grow another 37%, again higher than analyst predictions.
Where the Money Is Going
CFO Amy Hood explained that more than half of Microsoft’s recent spending went into long-term infrastructure that will support services for over 15 years. The rest was used to buy powerful chips like CPUs and GPUs for AI.
Gaming: Xbox Game Pass Hits New Milestone
The gaming segment had mixed results. Overall gaming revenue went up 10%, but Xbox hardware sales dropped by 22%. However, revenue from Xbox services and content grew by 13%.
A big highlight was Xbox Game Pass, which earned nearly $5 billion annually for the first time. Microsoft also became the top game publisher on both Xbox and PlayStation, thanks to cross-platform releases like Forza Horizon 5 and Indiana Jones and the Great Circle.
Windows and Surface Devices See Modest Growth
Microsoft’s Windows and devices division grew 3% year-over-year. This growth was driven by more businesses buying PCs ahead of Windows 10 support ending in October. Two new Surface devices were launched: a 12-inch Surface Pro and a 13-inch Surface Laptop.
However, the company expects a small decline in this segment next quarter, as PC sales may slow down again.
AI Tools Reach 100 Million Users
Microsoft’s Copilot AI tools now have over 100 million monthly users, while all AI features across Microsoft products serve over 800 million users. Still, this number is less than Google’s Gemini AI, which has 450 million users.
Layoffs and Valuation
Despite strong financial performance, Microsoft has laid off over 15,000 employees since May, keeping its total staff at around 228,000. CEO Nadella admitted that it might seem odd to cut jobs during such profitable times but said the company is focused on long-term goals.
Microsoft is also getting close to a $4 trillion market value, only $200 billion away from reaching that milestone.
Read more: Are More Job Cuts Coming? Microsoft Employees React to CEO Satya Nadella’s Memo
Microsoft had a fantastic quarter, led by strong cloud growth, increasing demand for AI, and solid performance in gaming and Windows. The company is heavily investing in the future, especially in AI, and could soon become one of the most valuable companies in the world.
