Microsoft Proves AI Spending Can Pay Off With Record Azure Revenue

Microsoft's recent quarterly results have shown that its massive investments in artificial intelligence (AI) infrastructure are paying off. The company reported $100 billion in sales from its Azure cloud computing division for the fiscal year, a 33% increase from 2025.

This growth was driven by Microsoft's significant uptick in AI infrastructure spending, which has proven to be a successful strategy. In contrast, Meta and Alphabet have struggled to recoup their AI costs, with Meta's free cash flow plummeting 91% in the most recent quarter.

Microsoft's paid Copilot seats also saw a nearly 50% increase, reaching 30 million by the end of the quarter. This indicates that customers are seeing value in Microsoft's AI services and are willing to pay for them.

While Microsoft's capital expenditures (capex) have had an impact on its free cash flow, it has not been as severe as its peers'. The company's free cash flow is down just 23% from the year-ago quarter and remains relatively high at $19.6 billion.