Microsoft announced plans to cut 60,000 jobs worldwide this week, however any negativity surrounding the company did not appear to affect its bottom line as latest quarterly results led to a bump in the share price in after-hours trading. This indicates that the company’s substantial investments in artificial intelligence are delivering tangible business results. At the same time, scepticism is growing on Wall Street about the high costs of expanding infrastructure at major technology companies.
The Azure cloud segment grew by 48%, generating $33.17 billion (€29.7 billion) in the quarter ending in September. This figure exceeded Visible Alpha’s forecasts of $32.84 billion (€29.48 billion) and represented a significant jump from the previous quarter’s $29.4 billion (€26.39 billion).
Following these announcements, Microsoft’s share price rose by around 6% in after-hours trading, contributing to a gain of approximately 9% since the start of the year. Microsoft recently began reporting Azure’s actual revenue in dollars, rather than stating only its percentage growth. The company aims to provide greater transparency and enable direct comparisons with competitors such as Google Cloud and Amazon Web Services.
The wider technology sector is expected to invest more than $700 billion (€628 billion) this year in energy, hardware and the construction of data centres to support AI operations. Although accelerating growth suggests that these investments are bearing fruit, the financial burden of such spending has caused unease.
Market volatility has been exacerbated by declining cash flows and rising debt across the sector, further highlighted by stability concerns at CoreWeave and increased costs of insuring Meta’s debt. Meta, in particular, saw its share price fall after the company raised its spending forecasts and proposed issuing new shares to cover these costs.
Strong financial position
Despite these headwinds and the potential threat that autonomous AI agents pose to its traditional software products, Microsoft remains in a strong financial position. The company expects total capital expenditure of $190 billion (€170 billion) in 2026. However, financial analysts at Truist note that Microsoft’s balance sheet is stronger than those of its competitors, citing the company’s low credit default swap spreads as evidence of minimal risk.
Moreover, Microsoft is the only major cloud provider expected to maintain positive cash flow next year, while rivals such as Oracle, Amazon and Alphabet are expected to face cash shortfalls.
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