Microsoft on Wednesday reported its quarterly sales grew 18% to $77.7 billion, beating Wall Street expectations while also surprising some investors with the huge amounts of money it is spending to expand its cloud computing infrastructure and meet demand for artificial intelligence tools.
The software maker said it spent nearly $35 billion in the July-September quarter on capital expenditures to support AI and cloud demand, nearly half of that on computer chips and much of the rest related to data center real estate.
That overshadowed Microsoft's report of a 22% increase in quarterly profit to $30.8 billion, or $4.13 per share, which easily beat Wall Street expectations for the period. Microsoft said those results excluded the impacts of money it invested in OpenAI, in an attempt to “help clarify” how those losses affected Microsoft's core business.
Microsoft was expected to earn $3.67 per share on revenue of $75.38 billion, according to analysts surveyed by FactSet Research.
The results came a day after a new deal with OpenAI pushed Microsoft to $4 trillion in valuation for the second time this year. But shares in Microsoft then dropped in the hours before it disclosed its earnings Wednesday as the company battled an outage affecting its Azure cloud computing platform. They dropped further — by more than 3% — in after-hours trading Wednesday as investors considered the significance of the earnings report.
Driving investor enthusiasm on Tuesday was the announcement of Microsoft's revised business deal with its longtime partner OpenAI, maker of ChatGPT and now the world's most valuable startup. While no longer OpenAI's exclusive cloud provider, a relationship that helped bankroll the startup's early growth, Microsoft will retain commercial rights to OpenAI products through 2032 and get a roughly 27% stake in OpenAI’s new for-profit arm.
Microsoft also said Wednesday that it has already invested $11.6 billion of the total $13 billion it has committed to OpenAI.
Microsoft’s valuation previously passed $4 trillion in July, making it the second company after Nvidia to reach the milestone. Microsoft again and Apple for the first time crossed $4 trillion this week, while Nvidia went on to achieve a different milestone: the first $5 trillion company.
The sky-high valuations highlight the investor frenzy around artificial intelligence, which some fear could turn into a bust if AI products aren't as transformative or profitable as promised.
Quarterly revenue from Microsoft's cloud-focused business segment was $30.9 billion, up 28% from the same time last year and just slightly above what analysts were expecting. Revenue from Microsoft's workplace software, which includes its email and word processing tools, was up 17% to $33 billion.
Microsoft's recent focus has centered around pitching its flagship AI assistant Copilot to help with a variety of work tasks, and last week gave it a new animated avatar exterior called Mico.
FILE - The logo of Microsoft is seen outside its French headquarters in Issy-les-Moulineaux, outside Paris on May 13, 2024. (AP Photo/Thibault Camus, File)
NEW YORK (AP) — Stocks are rushing higher worldwide, and oil prices are easing Wednesday as hopes build that the war with Iran could end soon. That's even though some of the signals investors saw as hopeful are already under dispute, and several prior bouts of optimism in financial markets quickly got undercut by continued, fierce fighting in the war.
The S&P 500 rose 0.8% and added to its leap from the day before, which was its best since last spring. That followed even bigger gains for stock markets across Europe and Asia, including an 8.4% surge in South Korea, which were catching up to Wall Street’s rally from Tuesday.
The Dow Jones Industrial Average was up 357 points, or 0.8%, as of 10:45 a.m. Eastern time, and the Nasdaq composite was 1.2% higher.
Oil prices also fell back toward $100 per barrel after President Donald Trump claimed shortly before Wall Street began trading that Iran “has just asked the United States of America for a CEASEFIRE!”
“We will consider when Hormuz Strait is open, free, and clear. Until then, we are blasting Iran into oblivion or, as they say, back to the Stone Ages!!!”
Trump had also said the night before that the U.S. military could end its offensive in two to three weeks. That added to optimism following a couple tenuous signals of hope from earlier Tuesday that Wall Street latched onto, including a news report quoting Iran’s president as saying that it has “the necessary will to end the war” as long as certain requirements are met, including “guarantees to prevent a recurrence of aggression.”
The worry on Wall Street has been that the war may last a long time and keep oil and natural gas from the Persian Gulf out of global markets, which could create a brutal blast of inflation.
But hope has been quick to reverse to doubt on Wall Street, triggering manic swings back and forth for financial markets since the war with Iran began. Trump has also made statements that lifted markets, only to see the gains quickly disappear after increasing his military threats against Iran. Investors say Trump’s statements are becoming less impactful for financial markets.
Iran’s Foreign Ministry spokesman, Esmail Baghaei, called Trump’s claim about asking for a ceasefire “false and baseless,” according to a report on Iranian state television.
And oil prices remain high, even if they’ve eased so far this week. The price for a barrel of Brent crude oil, the international standard, was sitting at $101.83 following its declines, which is still up from roughly $70 before the war began.
U.S. gasoline prices rose again overnight to a national average of $4.06 per gallon, according to the auto club AAA.
Iran, meanwhile, hit an oil tanker off the coast of Qatar and Kuwait’s airport on Wednesday while airstrikes battered Tehran as the fighting continued. Iran also continues to hold a grip on the Strait of Hormuz, where a fifth of the world’s traded oil passes during peacetime.
“De-escalation hopes have given markets a lift, but we think the effects of the war would, in many cases, persist even if the war did end soon,” Thomas Mathews, head of markets, Asia Pacific at Capital Economics, said in a research note Wednesday.
“It’s worth thinking through how markets might fare if the war were to end ‘very soon,’” he wrote. “Do markets have further to recover if sentiment continues to improve? The answer is almost certainly yes.”
The White House said Trump will deliver a public address Wednesday evening on the Iran war.
On Wall Street, the majority of stocks rose, with Big Tech powering the move higher. Gains of 2.5% for Alphabet and 1% for Nvidia were two of the strongest forces lifting the S&P 500.
They helped offset a 14.3% drop for Nike, which fell even though it reported a stronger profit for the latest quarter than expected. Analysts said it gave some lackluster financial forecasts.
Hasbro fell 3.8% after the toy company found someone had gained unauthorized access to its computer network and is working to assess the full impact.
In stock markets abroad, indexes leaped more than 1.5% in France, Germany and the United Kingdom. Asian markets had even bigger gains.
Tokyo’s Nikkei 225 jumped 5.2% after a survey by Japan’s central bank showed business sentiment for major Japanese manufacturers improved despite worries about the Iran war.
In the bond market, Treasury yields held relatively steady after a report said U.S. retailers made more money in February than economists expected. A separate report said U.S. manufacturing growth last month was slightly faster than economists expected.
The 10-year Treasury yield rose to 4.31% from 4.30% late Tuesday.
AP Business Writers Chan Ho-him and Matt Ott contributed.
James Conti works on the floor at the New York Stock Exchange in New York, Tuesday, March 31, 2026. (AP Photo/Seth Wenig)
Philip Finale works on the floor at the New York Stock Exchange in New York, Tuesday, March 31, 2026. (AP Photo/Seth Wenig)
Currency traders watch monitors near a screen showing the Korea Composite Stock Price Index (KOSPI), left, at the foreign exchange dealing room of the Hana Bank headquarters in Seoul, South Korea, Wednesday, April 1, 2026. (AP Photo/Ahn Young-joon)
Currency traders watch monitors near a screen showing the Korea Composite Stock Price Index (KOSPI), top center, and the foreign exchange rate between U.S. dollar and South Korean won, top center left, at the foreign exchange dealing room of the Hana Bank headquarters in Seoul, South Korea, Wednesday, April 1, 2026. (AP Photo/Ahn Young-joon)
Currency traders work at the foreign exchange dealing room of the Hana Bank headquarters in Seoul, South Korea, Wednesday, April 1, 2026. (AP Photo/Ahn Young-joon)
A currency trader reacts near a screen showing the Korea Composite Stock Price Index (KOSPI), right, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the Hana Bank headquarters in Seoul, South Korea, Wednesday, April 1, 2026. (AP Photo/Ahn Young-joon)
A screen displays financial information on the floor at the New York Stock Exchange in New York, Tuesday, March 31, 2026. (AP Photo/Seth Wenig)
