Microsoft Azure Grows 48% as AI Spending Doubles

Microsoft Corporation reported strong growth in its AI-driven sectors, with Azure growing 48% and generating nearly 74% of the company's incremental quarterly revenue. The company also saw Foundry revenue more than triple and an increase in the adoption of Copilot and enterprise agents.

This expansion required significant investment, as capital expenditures doubled. This spending reduced quarterly free cash flow to $18.6 billion. Approximately three-quarters of the first-quarter capital expenditures were allocated to shorter-lived CPUs and GPUs, raising concerns regarding future replacement costs and cash conversion.