Microsoft Delivers Earnings Beat Despite Heavy AI Spending
Microsoft delivered a strong set of results for fiscal Q2 2025, reporting revenue of $81.3 billion, up 17% from the same period last year.
Growth was broad-based, with demand for AI-driven and cloud services continuing to anchor the company’s expansion, even as investors focused closely on rising capital spending.
- Revenue rose 17% to $81.3 billion, with Azure and cloud services up 39%.
- Earnings beat expectations, while capital spending hit a record $37.5 billion.
- The stock erased a 5% post-earnings drop and is up over 7% in the past week.
The earnings beat was driven by solid operating performance rather than one-off items. Earnings per share came in at $4.14 on a stock-compensation basis, comfortably ahead of Wall Street’s $3.97 forecast. Management highlighted that AI-related workloads are increasingly embedded across Microsoft’s product stack, supporting both enterprise and consumer demand.
Cloud and AI momentum remains the core driver
Azure and other cloud services recorded a 39% jump in revenue, reinforcing Microsoft’s position as one of the primary beneficiaries of enterprise AI adoption. Executives emphasized that AI services are now contributing meaningfully across multiple business lines, rather than being confined to a single segment. Microsoft Cloud revenue crossed the $50 billion mark during the quarter, reflecting sustained customer demand despite a more cautious macro backdrop.
At the same time, Microsoft’s capital spending reached a record $37.5 billion as the company continues to scale its data center footprint to support AI workloads. While the investment underscores long-term confidence, it also drew scrutiny from investors concerned about near-term margin pressure.
Stock reaction and technical outlook
Despite the earnings beat, Microsoft shares initially fell around 5% in after-hours trading as markets reacted to the scale of capital expenditures. Those losses, however, were short-lived. The stock recovered quickly and has since erased the post-earnings drop, rising more than 7% over the past week.
From a technical perspective, the stock is trading near $480 and remains above key medium-term support levels. Momentum indicators are showing improvement, with the RSI rebounding from oversold territory and moving back above the mid-50 range. The MACD has started to curl higher, suggesting a potential shift back toward bullish momentum after a prolonged consolidation phase. Holding above the $460-$470 zone appears critical for maintaining the current recovery trend.
Market participants are now watching whether Microsoft can regain the $500 level, which previously acted as both resistance and a psychological threshold. A sustained move above that area could reopen the path toward last year’s highs, while failure to hold recent gains may trigger another period of range-bound trading.
Overall, the quarter reinforced Microsoft’s status as a central player in the AI-driven transformation of enterprise technology, even as the market balances long-term growth potential against the cost of building that future.
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Alexander Zdravkov is a person who always looks for the logic behind things. He has more than 3 years of experience in the crypto space, where he skillfully identifies new trends in the world of digital currencies. Whether providing in-depth analysis or daily reports on all topics, his deep understanding and enthusiasm for what he does make him a valuable member of the team.
