Microsoft reported robust earnings exceeding expectations, driven by significant growth in its Azure cloud division.

Azure, the fastest-growing segment of Microsoft, saw revenue increase by 22%, highlighting the company's strategic focus on artificial intelligence.

CEO Satya Nadella emphasized the transformative impact of AI, noting that Microsoft's AI business is on track for a $10 billion annual run-rate milestone next quarter.

Azure now serves 39,000 customers, marking an 80% increase from the previous year.

The company has established AI data centers in over 60 regions globally, with Azure-OpenAI usage doubling in the past six months.

Microsoft's financial results beat forecasts, reporting $3.30 earnings per share against the anticipated $3.10, with revenues reaching $65.59 billion compared to the expected $64.51 billion.

Following these outcomes, the company's shares saw an increase in after-hours trading.

Meanwhile, Google's parent company, Alphabet, reported a 35% growth in its cloud business, totaling $11.35 billion.

To support its data centers, Microsoft is considering reviving the Three Mile Island nuclear plant in Pennsylvania to supply electricity over the next 20 years.

As Microsoft invests heavily in AI, financial expenditures have surged, including over $108 billion in finance leases for data centers.

Investors, however, remain cautious about the substantial investments in AI by tech giants like Microsoft, which form part of the 'Magnificent Seven' alongside Alphabet, Amazon, Apple, Meta, Nvidia, and Tesla.

These companies collectively account for $12 trillion in market capitalization.

Analyst Dan Ives termed this a 'gut-check quarter' for Microsoft, but maintains an 'outperform' rating due to Microsoft's strong positioning and momentum in cloud computing.