The results, which solidly beat analyst expectations, drove Microsoft's share price more than five percent higher in after-hours trading.
All eyes will be on what the company says about its outlook for the future in a call with analysts, with worries high that US multinationals could suffer due to the high tariff policies of President Donald Trump's administration.
Microsoft has remained more discreet in its support for Trump than its rivals, many of which contributed money to the president's inauguration fund and announced major investments in the United States.
Microsoft, which celebrates its 50th anniversary this year, saw net profits climb 18 percent to $25.8 billion, compared to the same period last year.
Crucially, Microsoft Cloud revenue reached $42.4 billion, growing 20 percent year-over-year, which Chief Financial Officer Amy Hood attributed to "continued demand for our differentiated offerings."
Microsoft was one of the first tech giants to double down on artificial intelligence when the launch of ChatGPT in 2022 rocked the tech industry.
Like its rivals, it has spent massively on building the infrastructure necessary to power the AI revolution, with analysts keeping a close eye on the return on investment.
The company in January said it was on track to pump about $80 billion into artificial intelligence this fiscal year.
Microsoft this quarter said its relationship with ChatGPT creator OpenAI was evolving and that it would no longer be the exclusive provider of the startup's colossal computing needs.
It has been a major backer of OpenAI, mainly by providing the heavy computing capacity required to build AI models.
The company's Intelligent Cloud segment, a key part of Microsoft's business, showed particularly strong growth with revenue of $26.8 billion, up 21 percent.
Its Azure and other cloud services revenue surged 33 percent, reflecting the increasing adoption of Microsoft's cloud platforms.
The Productivity and Business Processes division, which includes Office 365 and LinkedIn, generated $29.9 billion in revenue, a 10 percent increase.
The company said it returned $9.7 billion to shareholders through dividends and share repurchases during the quarter.
Microsoft president urges fast 'resolution' of transatlantic trade tensions
Brussels, Belgium (AFP) April 30, 2025 -
Microsoft President Brad Smith called Wednesday for a swift resolution of trade tensions between the United States and Europe, during an interview with AFP in Brussels.
Transatlantic ties are at their lowest since US President Donald Trump returned to the White House and unleashed painful tariffs against allies and rivals alike within weeks.
"There are real issues that deserve discussion. We hope that there will be real resolutions that bring people together on both sides of the Atlantic, and the sooner, the better," Smith said.
"We're all going to need to see how the trade discussions unfold," he said.
Trump has hit steel, aluminium and auto imports with 25-percent tariffs, and in April he imposed sweeping 20-percent levies on EU goods before announcing a 90-day pause.
Now the European Union and the United States are in talks to avoid a bitter conflict that risks undoing a trade relationship worth 1.6 trillion euros ($1.8 trillion).
Smith was in Europe to reaffirm Microsoft's commitment to the continent, vowing that the company would protect European users' data against any orders in court.
There are fears in Europe about what the cosying up of American Big Tech chief executives to Trump -- including Meta chief Mark Zuckerberg -- means for the continent where American technologies dominate.
Smith refrained from directly criticising Trump, saying that doing so would harm the "bridge" he seeks to build between the United States and Europe.
"We believe that one of the great strengths of the world is the transatlantic relationship. It's been important and good for the United States, it's been important and good for Europe," Smith said.
He noted that Microsoft had "very important" relationships with both sides.
- Bigger binding ties -
Smith was in Europe as the continent comes to terms with how it should respond to the changing nature of the US-EU relationship.
Calls have grown in the EU to wean the bloc off US technology, as Europeans fear Trump could demand that American companies sever Europe's access in any trade war.
Microsoft recognised Europe's changing view of the United States, Smith said, but the ties that bound the two sides were "so much bigger" than "issues that might divide us".
"So let's address the issues that divide us, and let's remain committed to the ties that bind us, because I think they're fundamental, not just to two continents, but to the entire world," he added.
Although Europe is now reckoning with what a future EU-US relationship will look like, Smith struck an optimistic note that the two sides could resolve issues.
"I don't think we can recommit across the Atlantic until we work through the issues that are currently on the trade table, so to speak. But I believe in a future."
One area in which Microsoft has poured tens of billions of dollars is artificial intelligence, which Smith said was something it sought to develop with European players.
Despite the excitement over AI, there are also concerns about the environmental impact, which Smith said Microsoft was focused on.
"We're committed to reducing our carbon emissions, to being carbon negative by 2030," he said, adding that Microsoft also saw AI playing a role in addressing the issue.
"It will lead to, we think, the kinds of breakthroughs the world needs," he said.
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