Fueled by its AI initiatives, Microsoft exceeded expectations in the first quarter of 2025
Not only was Microsoft’s growth solid, it was the fastest among the Big Techs.
For a company valued at nearly $3 trillion, moving the needle isn’t easy. But Microsoft continues to defy gravity. In the first quarter of calendar 2025, it didn’t just deliver solid results—it outpaced the rest of Big Tech.
Revenue rose 13.3% year over year to $70.07 billion, outpacing estimates by 2.4%. Net income rose 18% to $25.8 billion, or $3.46 per share—7% ahead of the $3.22 analysts had expected. The stock surged 9% in after-hours trading as investors digested not just the beat, but management’s upbeat forecast for the rest of the year.
The performance was powered largely by cloud—and increasingly, by AI. Azure revenue grew 33%, with roughly half that growth directly attributed to artificial intelligence workloads.
Microsoft’s Intelligent Cloud segment, which includes Azure, brought in $26.75 billion, a 21% year-over-year increase that exceeded analyst forecasts. CEO Satya Nadella emphasised that demand for AI infrastructure is translating into real revenue, pointing to GitHub Copilot’s user base more than quadrupling in a year to over 15 million developers.
Other business lines contributed as well. The Productivity and Business Processes unit, home to Office and LinkedIn, grew 10% to $29.94 billion. While LinkedIn’s recruiting tools remain pressured by a weak hiring market, software subscriptions continued to drive stable gains.
Meanwhile, the More Personal Computing unit—which includes Windows, Surface devices, and Xbox—posted 6% revenue growth to $13.37 billion, beating estimates. Windows licensing revenue rose 3%, lifted in part by businesses transitioning from Windows 10, which loses support this October.
Emmanuel Oyedeji
This kind of broad-based performance puts Microsoft ahead of its peers. While Alphabet posted a solid 12% revenue increase and Amazon grew 10%, Apple trailed with just 5% growth amid ongoing challenges. Microsoft’s 13.3% gain was the highest among the major tech players reporting so far, reinforcing its leadership as AI begins to reshape the entire sector.
Emmanuel Oyedeji
Looking ahead, Microsoft faces geopolitical headwinds. Tariffs announced in April could increase costs for the AI infrastructure it is building, many of which rely on imported hardware. Overall, Microsoft plans to spend $80 billion this fiscal year on new data centres to handle AI workloads up 53% year over year in Q1 alone, though rising tariffs could make those plans more expensive.
Despite external pressures, Microsoft expects revenue to grow around 12% over the next year—a slight deceleration from recent years, but still strong.
For now, Microsoft’s performance is still impressive by almost any measure. It’s a company with a $2.93 trillion market cap, nearly $270 billion in trailing revenue, and it’s still growing at double-digit rates. Microsoft isn’t just keeping pace—it’s setting it.
Oluwaseun Bamisile
