Microsoft shares jumped as much as 10% in pre-market trading on Thursday after the company forecast accelerating Azure growth and posted record quarterly profit, offering the clearest signal yet that its massive artificial intelligence outlay is translating into revenue. At the same time, Meta Platforms reported a profit decline as legal expenses and severance costs ate into margins, underscoring the diverging near-term economics of the AI arms race.
Azure growth accelerates
The company guided for July-September revenue of $89.85bn to $90.95bn, representing 16% to 17% year-on-year growth, and said Azure revenue would grow approximately 45% in constant currency, up from 43% in the April-June quarter. That April-June period already delivered $90bn in revenue, an 18% increase that beat the $87.6bn consensus, while Microsoft Cloud revenue climbed 27% to $59.3bn. Azure and other cloud services grew 43%, and management said demand still exceeds available capacity despite new infrastructure coming online. For the full fiscal year ended in June, revenue reached $331.8bn, and Azure crossed the $100bn annual threshold for the first time.
The Anthropic boost
Net profit rose 31% to a record $35.8bn, though the figure includes a $3.2bn unrealised gain on Microsoft's investment in Anthropic. Stripping that out, diluted earnings per share of $4.81 still comfortably cleared the $4.24 estimate. Microsoft 365 Copilot now counts more than 30 million paid seats, a metric the company cites as evidence that its AI assistants are gaining traction inside the enterprise workflow. Analysts described the quarter as the first in three where the market appears willing to accept that the spending is buying something real.
CapEx discipline holds
Chief financial officer Amy Hood told investors that calendar 2026 capital expenditure plans remain unchanged in practice, even though an accounting shift brings the disclosed figure closer to $175bn from the $190bn previously signaled. The distinction matters: rivals have been steadily raising their spending forecasts, while Microsoft is effectively holding the line. Hood framed the discipline as a function of efficiency gains across the platform rather than a pullback in ambition.
Meta's margin hit
Meta's second-quarter profit fell to $15.85bn even as revenue beat expectations, with the company attributing the decline to legal expenses and severance costs. The contrast is stark: Microsoft is converting AI demand into accelerating top-line growth and expanding margins, while Meta is still absorbing restructuring charges as it builds out its own infrastructure. Investors will watch whether Meta's next quarter shows the same leverage Microsoft just demonstrated, or whether the cost structure remains a drag.