Microsoft Q4 Prediction: Generative AI revolution to propel cloud revenue beyond $30 Billion

Reading time icon 2 min. read


Readers help support Windows Report. We may get a commission if you buy through our links. Tooltip Icon

Read our disclosure page to find out how can you help Windows Report sustain the editorial team Read more

As reported by AccelerationEconomy, powered by its traditional fiscal Q4 surge, coupled with the explosive new market for Generative AI tools, Microsoft is poised to exceed $30 billion in quarterly cloud revenue for the first time, when upcoming Q4 numbers are released later this month.

During Microsoft’s fiscal Q3 release three months ago, CEO Satya Nadella hailed the emergence of “a new era of computing,” made possible by the convergence of the world’s most advanced AI models and the world’s most universal user interface: natural language.

Microsoft’s CFO, Amy Hood, and CTO, Kevin Scott, highlighted the substantial customer demand propelling the rapid growth of Microsoft’s next-generation AI solutions, positioning it as the company’s fastest-growing $10-billion business to date.

During an AI Discussion on June 10, Hood addressed inquiries from financial analysts regarding revenue allocation, emphasizing that the revenue originates from two sources: the tools and services used by customers to develop AI applications, leveraging Azure OpenAI APIs and Azure infrastructure, and the integration of AI capabilities into every Microsoft Cloud solution.

Hood expressed confidence in the energy surrounding these developments, leading to the anticipation of impressive results when Microsoft disclosed its fiscal Q4 results for the quarter ending on June 30.

She further said”

Total cloud revenue: Microsoft’s cloud performance in the previous quarter was outstanding, with revenue reaching $28.5 billion, a remarkable 22% increase. The expectation for Q4 is to maintain this impressive growth, with an anticipated revenue of $30.6 billion, marking a significant achievement for a business of this scale.

Azure growth: Over the past four quarters, revenue growth from Azure and “other cloud services” has experienced a decline, gradually decreasing from 40% to 35%, 31%, and finally 27%. However, a reversal is expected in fiscal Q4, with Azure revenue projected to grow by 28%. This growth is fueled by the strength of the AI services mentioned by Hood.

Cloud as a percentage of total revenue: Cloud revenue accounted for 50% of Microsoft’s total revenue about a year ago. It is predicted that in fiscal Q4, this percentage will rise to 57%. Last quarter, cloud revenue represented 54% ($28.5 billion out of a total of $52.9 billion), reflecting Microsoft’s commitment to integrating GenAI into every Microsoft Cloud solution.

Stay tuned to OnMSFT.com for the Q4 earnings results and lots more!