Microsoft has reported a profit of more than $36.6bn (£27.5bn) for the three months to the end of September, days after announcing plans to offer buyouts to around 60,000 workers as it pours billions of dollars into artificial intelligence.
Revenue rose to $92.3bn, up 19% from a year earlier, helped by a 30% increase in Microsoft Cloud, the company's range of enterprise technology services. Shares gained almost 2.9% in after-hours trading in New York on Wednesday.
The results come as investors scrutinise whether the industry's heavy spending on AI will pay off. Big technology companies including Amazon, Meta and Alphabet are expected to spend more than $700bn this year on AI chips and infrastructure such as data centres.
Microsoft said on Monday it would offer buyouts to about 60,000 employees to cut costs. This week, the company said it would extend the voluntary redundancy offer to eligible employees in teams across Canada, India, the UK and the US to adapt its workforce to “changing needs”. Microsoft said the offer would create “greater flexibility” for the firm and allow workers to leave with financial support and career planning resources. The company employs more than 220,000 people worldwide.
The company flagged "substantial investments" in AI among risks that could affect its finances. Chief executive Satya Nadella said AI development had helped grow adoption of the technology and delivered "real-world impact across every industry."
Microsoft's stronger-than-expected results contrasted with Alphabet, whose shares fell 9.75% on Wednesday after the Google owner reported a 25% drop in quarterly net profit and said it would continue spending heavily on AI.
Analysis
Why This Matters
- Microsoft's earnings are a key test of whether surging AI spending is starting to show up in profits, with investors closely watching big tech results.
- The buyout programme shows Microsoft cutting costs in its wider workforce while continuing to fund AI infrastructure.
- The contrasting drop in Alphabet's shares highlights the risk investors see in AI's heavy capital demands.
Background
Microsoft, like other major technology firms, has been investing heavily in the infrastructure that powers AI, including data centres and AI chips, even as questions remain over whether such huge spending will pay off. The voluntary redundancy scheme is part of an effort to trim costs while maintaining those investments. The company employs more than 220,000 people worldwide.
Key Perspectives
Microsoft: says the buyouts will adapt its workforce to "changing needs", create "greater flexibility" and give departing workers financial support and career planning resources.
Satya Nadella: says AI development has helped grow adoption of the technology and delivered "real-world impact across every industry."
Investors: are watching tech earnings closely to gauge whether heavy spending on AI is sustainable.
What to Watch
- Whether Microsoft's shares hold their after-hours gains when regular trading opens.
- Whether Alphabet's sell-off signals a broader reassessment of AI spending among investors.
- Whether Microsoft extends its voluntary redundancy offer to more countries or teams as it balances AI investment and costs.
Checked
12 claims in this story checked against 1 source: 12 supported.
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- SupportedMicrosoft reported more than $36.6bn (£27.5bn) in profit for the three months to the end of September.BBC News: “Microsoft says its profits for the three months to the end of September jumped to more than $36.6bn (£27.5bn)”
- SupportedMicrosoft announced plans on Monday to offer buyouts to around 60,000 workers to cut costs, days before reporting its results.BBC News: “On Monday, the Windows developer said it would offer buyouts to around 60,000 of its workers to cut costs”
- SupportedMicrosoft is pouring billions of dollars into artificial intelligence.BBC News: “On Monday, the Windows developer said it would offer buyouts to around 60,000 of its workers to cut costs as it pours billions of dollars into artificial intelligence (AI).”
- SupportedMicrosoft revenue rose to $92.3bn, up 19% from a year earlier.BBC News: “Microsoft said on Wednesday that its quarterly revenue rose to $92.3bn - up 19% from a year earlier”
- SupportedMicrosoft Cloud revenue increased by 30%.BBC News: “Its earnings were lifted by a 30% increase in revenue for Microsoft Cloud - its range of enterprise technology services.”
- SupportedMicrosoft shares gained almost 2.9% in after-hours trading in New York on Wednesday.BBC News: “Microsoft shares rose by almost 2.9% in after hours trading in New York on Wednesday.”
- SupportedInvestors are scrutinising whether heavy AI spending will pay off.BBC News: “The recent financial results of tech companies have been closely watched by investors as they gauge whether the heavy spending on AI is sustainable.”
- SupportedAmazon, Meta and Alphabet are expected to spend more than $700bn this year on AI chips and infrastructure, including data centres.BBC News: “Big tech companies like Amazon, Meta and Alphabet are expected to spend more than $700bn this year on AI chips and infrastructure like data centres.”
- SupportedMicrosoft said this week it would extend a voluntary redundancy offer to eligible employees in teams across Canada, India, the UK and the US to adapt its workforce to “changing needs”.BBC News: “This week, the company said it would extend a voluntary redundancy offer to eligible employees in teams across Canada, India, the UK and US to adapt its workforce to "changing needs".”
- SupportedMicrosoft said the offer would create “greater flexibility” and let workers leave with financial support and career planning resources.BBC News: “It will create "greater flexibility" for the firm and allow workers to leave with financial support and career planning resources, Microsoft said.”
- SupportedMicrosoft chief executive Satya Nadella said AI development had helped grow adoption and delivered “real-world impact across every industry.”BBC News: “The firm's chief executive Satya Nadella said AI development has helped grow the adoption of the technology and has delivered "real-world impact across every industry."”
- SupportedAlphabet shares fell 9.75% after it reported a 25% drop in quarterly net profit and said it would continue spending heavily on AI.BBC News: “The firm's shares fell by 9.75% after it reported a 25% drop in quarterly net profit from a year earlier and said it will continue to spend heavily on AI.”
