Microsoft: Azure grows 48% and OpenAI revenue hits $10B a quarter; capex heads to $170B

Microsoft opened its fiscal year with Azure growth of 48%, well ahead of the 44% consensus. Microsoft Cloud revenue reached $63.9B and Azure surpassed $100B on an annual basis, with its AI business running at a $37B annualized pace. GeekWire highlighted that OpenAI-related revenue hit $10B for the quarter, larger than Bing or Xbox. Management said demand still exceeds available supply.

Satya Nadella's LinkedIn post called this Copilot's biggest update to date, bringing Chat, Cowork, Autopilot and Code into one experience. Daily users grew nearly 50% quarter over quarter, and customers with more than 50K seats rose 8x year over year. Copilot passed 30 million paid seats, with Volkswagen scaling to over 330,000 employees. On the developer side, Jeff Hollan announced the Copilot harness in Foundry Agent Service for long-running governed agents.

The $170B capex guide is the number markets will fixate on. Paired with AWS's 39% growth, it confirms the compute-investment arms race defining the quarter. The $10B OpenAI figure eases fears that Microsoft's AI fortunes depend entirely on one partner, while showing how lucrative that partnership remains.

Caveats: supply constraints cap upside, and analysts tracking Microsoft's roughly $1 trillion contracted backlog warn that conversion to revenue depends on data-center build-outs. Watch capex ROI commentary and any change in OpenAI exclusivity terms.