Microsoft on Wednesday reported fourth-quarter revenue of $90 billion, powered by a 27 percent jump in Microsoft Cloud revenue to $59.3 billion and the first quarter in which Azure crossed a $100 billion annualized run rate, sending the shares up 9 percent in premarket trading Thursday even as Meta fell 9 percent on softer guidance.
The split verdict at the top of the Big Tech league table hardened a divide running through this earnings season: investors are still willing to pay for AI infrastructure revenue they can see today, and increasingly reluctant to pay for AI capital-spending plans they cannot yet tie to a return.
By the numbers
Productivity revenue, which includes Microsoft 365 and LinkedIn, rose 14 percent to $37.8 billion. Microsoft 365 Copilot passed 30 million paid seats. The Windows OEM and devices segment fell 7 percent, which Microsoft attributed to "lower PC market demand."
Chief Executive Satya Nadella used the earnings call to confirm that Microsoft will launch a Copilot "super app" this year, combining the company's Copilot chatbot, GitHub coding assistant, Copilot Cowork and its Autopilot agents. "Copilot is evolving rapidly from chat to Cowork to Autopilots," Nadella said. "This quarter, we are bringing these Copilot experiences together, including code, in one super app."
Meta as counterweight
Meta's own report told the opposite story. The social-media company guided third-quarter revenue to between $61 billion and $64 billion, below analyst expectations of about $63.15 billion, and its free cash flow fell 91 percent from a year earlier to $784 million as AI capital spending climbed. Chief Executive Mark Zuckerberg told analysts Meta is "getting a lot of offers for compute at a significant premium" over what it paid, floating the possibility that the company could begin leasing spare capacity to third parties, though he offered few details.
Ben Barringer, head of technology research at Quilter Cheviot, wrote in a note that the "narrative from Mark Zuckerberg is a little light on detail and relying on what could be done in the future."
Xbox drag
Not every Microsoft line rose. Xbox content and services revenue, which includes the Game Pass subscription, fell 10 percent, and Xbox hardware sales dropped 13 percent, weeks after Xbox head Asha Sharma announced a "reset" plan that included layoffs and the spinoff of four game studios. Console prices are set to rise $100 or more on Aug. 1. Nadella said Microsoft expects "to return the business to growth in fiscal 2027."
The counterpoint
The glossy AI headline sits alongside a less flattering AI story running through Microsoft's own code. ProPublica has reported that Anthropic's Mythos model, given early access to select software makers, uncovered 90 "critical" and 141 "important" bugs in Microsoft's SharePoint collaboration platform in April alone, and that engineers were in "a mad dash" to patch them before comparable tools became publicly available. Microsoft's July Patch Tuesday release covered more than 600 bugs, an all-time high. The security drag runs through the same AI buildout that lifted the shares.
Microsoft's fiscal first-quarter results are due in late October. Nadella confirmed the Copilot super app would arrive this year but did not give a date.