Microsoftâs push into artificial intelligence is beginning to show stronger returns, with the company reporting a sharp rise in cloud revenue and a growing base of paid AI users in its latest quarterly results.

The technology giant posted revenue of $90 billion, or $4.81 per share, for the April-June quarter, an 18% increase from the year-ago period. The results exceeded Wall Street expectations, with analysts surveyed by FactSet Research having forecast earnings of $4.24 per share on revenue of $87.62 billion.

The companyâs cloud business remained a key growth driver, with Microsoft Cloud revenue reaching $59.3 billion during the quarter, up 27% year-on-year. Revenue from Azure and other cloud services rose 43%, reflecting continued demand for Microsoftâs cloud infrastructure, AI applications and services.

For the full fiscal year that ended in June, Microsoft recorded revenue of $331.8 billion. Meanwhile, net income climbed 31% to $35.8 billion on a GAAP basis, while diluted earnings per share (EPS) increased 32% to $4.81.

Azure hits milestone, Copilot adoption expands

Microsoft CEO Satya Nadella highlighted the momentum in the companyâs cloud and AI businesses, pointing to milestones achieved during the year.

âThis year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation,â CEO Satya Nadella said in a statement Wednesday.

The growth of Azure and Copilot together suggests Microsoft is gaining ground by combining AI infrastructure with AI-powered workplace tools, according to Michael J. Wolf, founder and CEO of Activate Consulting.

The company is âwinning on both fronts,â Wolf said in a statement, adding that Microsoft is âsupplying the cloud infrastructure for enterprise AI while monetizing the AI tools embedded in the products workers use every day.â

Investors look for returns from heavy AI investments

The latest results came at a time when investors have been closely tracking whether Microsoftâs significant AI investments can translate into returns.

Azure and Copilot, the companyâs flagship AI assistant, have been at the centre of these expectations as concerns over rising AI spending have increased across the industry.

Microsoft chief financial officer Amy Hood told investors during a call that the companyâs capital expenditure and investment expectations for calendar year 2026 remain unchanged.

An accounting change will bring the guidance closer to approximately $175 billion, Hood said, but the actual expectations remain âunchangedâ. The move differs from competitors that have continued to increase their spending forecasts.

Earlier this year, Hood had said Microsoft expected capital expenditure of $190 billion in 2026, including around $25 billion due to the impact of higher component pricing.

Microsoftâs capital expenditure for the latest quarter stood at $41 billion.

Bryan Hayes, an investment strategist at Zacks Investment Research, said in a statement that âfor the first time in three quarters, the market appears willing to grant that the spending is buying something real.â

Microsoft said it remained confident about the longer-term returns from its investments.

âWe remain very confident in the long-term return on these investments, given these strong demand signals, the increasing product usage weâve seen and the efficiencies that weâre driving across the platform,â said Danielle Criste, Microsoft's director of investor relations, in an interview.

Following the earnings announcement, Microsoft shares rose around 9% to $426.03 in after-hours trading.