Microsoft Reports Strong Q2 2025 Results Driven by AI Growth

2025-01-30 companies

Redmond, Thursday, 30 January 2025.
Microsoft’s Q2 revenue hit $69.6 billion, up 12%, with earnings per share at $3.23. AI revenue surged 175% year-over-year, reaching an annual run rate of $13 billion.

Financial Performance Highlights

Microsoft Corporation (NASDAQ: MSFT) exceeded Wall Street expectations in its fiscal second quarter ended December 31, 2024 [3]. The tech giant reported revenue of $69.6 billion, marking a 12.3% increase year-over-year, while net income rose to $24.1 billion from $21.87 billion in the previous year [3][4]. Earnings per share reached $3.23, surpassing analysts’ expectations of $3.11 [4]. The Microsoft Cloud segment achieved a significant milestone, with revenue exceeding $40.9 billion for the first time, representing a 21% year-over-year growth [5].

AI Drives Remarkable Growth

The company’s AI business demonstrated exceptional performance, with its revenue run rate surpassing $13 billion, marking a remarkable 175% increase year-over-year [3][5]. Azure AI services experienced substantial growth, expanding by 157% compared to the previous year [5]. CEO Satya Nadella noted that enterprises are transitioning from proof of concepts to enterprise-wide AI deployments [5]. This growth is supported by Microsoft’s significant infrastructure investments, having doubled its overall data center capacity in the past three years [5].

Segment Performance and Future Outlook

Microsoft’s Productivity and Business Processes segment generated $29.44 billion in revenue, exceeding the consensus estimate of $28.89 billion [4]. However, the company’s shares experienced a 5% decline following CFO Amy Hood’s guidance for the fiscal third quarter, projecting revenue between $67.7 billion and $68.7 billion, below analysts’ expectations of $69.78 billion [4]. The company expects to remain AI capacity-constrained in Q3, but anticipates aligning with near-term demand by the end of fiscal year 2025 [5].

Strategic Investments and Partnerships

Microsoft continues to strengthen its AI infrastructure, with capital expenditures reaching $22.6 billion [8]. The company recently received a new large Azure commitment from OpenAI [5], demonstrating the growing demand for its AI services. Microsoft’s Copilot adoption has expanded rapidly, with notable deployments such as Novartis increasing its seats to 40,000 users [5]. The company’s focus remains on scaling its global fleet and optimizing AI efficiency, as emphasized by CEO Nadella: ‘We are innovating across our tech stack and helping customers unlock the full ROI of AI to capture the massive opportunity ahead’ [3].

Sources

Microsoft earnings AI advancements