Key Highlights

● Microsoft reported revenue of $92.28 billion, above estimates.

● Microsoft Cloud revenue reached $63.9 billion.

● Azure growth accelerated and beat analyst forecasts.

● Capital spending came in below consensus.

Microsoft shares climbed in extended trading after the software giant topped revenue and earnings forecasts and reported faster growth in its Azure cloud platform.

Microsoft (NASDAQ:MSFT) climbed after the bell on Wednesday, October 28, after reporting fiscal first-quarter results that beat Wall Street's expectations on revenue and earnings, led by an acceleration in its Azure cloud business. The shares rose in extended trading after finishing the regular session essentially flat at $531.01.

Beat Across the Board

Microsoft reported revenue of $92.28 billion for the quarter, ahead of the roughly $90.63 billion analysts had expected and growing at a double-digit pace from a year earlier. Earnings per share also topped forecasts, though reports differed on the exact figure: one source put adjusted earnings at $4.89 a share, another at $4.92, against consensus estimates of $4.72 to $4.73.

Microsoft Cloud revenue reached $63.9 billion, ahead of the $61.62 billion analysts expected.

Azure Speeds Up

The highlight was Azure. Growth in Microsoft's cloud computing platform accelerated and beat analysts' forecasts, a sign that demand for AI computing and cloud services is still climbing. Capital spending came in below consensus, according to a market recap of the session, which may have reassured investors who have worried about the cost of the AI build-out.

That combination of faster cloud growth and spending discipline appeared to be exactly what investors wanted to see. Azure is the main way Microsoft sells AI computing capacity to businesses, so its growth rate has become one of the most closely watched figures in the entire earnings season.

A Sharp Contrast With Alphabet

Microsoft's gains came as Alphabet (NASDAQ:GOOGL), reporting at the same time, slid sharply in extended trading after missing on earnings and revenue and reporting negative free cash flow. Alphabet also raised its capital spending forecast.

Separately, Microsoft reportedly offered voluntary buyouts to up to 60,000 employees, according to market data. During the regular session, chipmakers and AI-infrastructure names led the market higher, with Vertiv (NYSE:VRT) and Oracle (NYSE:ORCL) both rallying.

What to Watch

Thursday's open will show whether Microsoft's after-hours gains hold, and whether they help offset the drag from Alphabet on the Nasdaq. Overnight, Nasdaq-100 futures pointed lower, while Dow futures edged higher.

Amazon (NASDAQ:AMZN) reports after Thursday's close, offering a direct comparison on cloud growth through Amazon Web Services. Apple (NASDAQ:AAPL) and Meta (NASDAQ:META) report later this week.