Microsoft shares rose 2.5% in after-hours trading after Azure, its cloud computing platform, grew 48% in the first quarter of its 2027 financial year.
That compared with 42% in the previous quarter and a consensus forecast of 45.2%.
Azure revenue was $33.17 billion, against expectations of $32.32 billion.
Group revenue rose 19% to $92.28 billion, ahead of the $90.62 billion analysts expected and above the top of Microsoft's own guidance.
Earnings were $4.92 a share, or $4.89 excluding gains on its OpenAI investment, against a forecast of $4.71.
Operating income was $45.92 billion, a margin of 49.8%.
Capex below guidance
Capital spending including finance leases was $45.2 billion, below the $50.67 billion analysts expected and Microsoft's guidance to exceed $50 billion.
Free cash flow was $18.6 billion.
Commercial remaining performance obligation, the value of contracted work not yet recognised as revenue, was $677 billion, roughly flat on June's $678 billion.
Broker view
Yorkville Ives, the US broker led by Dan Ives, says the 48% figure shows the new capacity landed and demand filled it.
It says the capex shortfall left free cash flow well ahead of what Street estimates implied.
Copilot, Microsoft's AI assistant, seat numbers were not in the release, so Yorkville will look to the call for them.
It also wants second-quarter guidance, against consensus revenue of $95.64 billion and Azure growth of 46%, and an explanation for the 12% fall in commercial bookings, which compares with last year's large Azure commitments.
It keeps its Outperform rating and $615 price target, against a price of $531.33 in its note.
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