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Microsoft Q2 Earnings: AI Business Made 175% Revenue Growth (2025)

Microsoft Corporation, founded by Bill Gates and Paul Allen in 1975, has evolved into one of the most influential technology companies globally. Headquartered in Redmond, Washington, Microsoft has a diverse portfolio that includes software, hardware, and services. Its flagship products, such as the Windows operating system, Microsoft Office suite, and Azure cloud services, have revolutionized personal computing and business operations worldwide. Under the leadership of CEO Satya Nadella, Microsoft has embraced cloud computing and artificial intelligence, driven innovation and maintaining its competitive edge in the tech industry.

Microsoft’s commitment to sustainability and corporate social responsibility is evident in its ambitious goals, such as achieving carbon negativity by 2030

Microsoft Fiscal Q2 2025

Microsoft (MSFT) has announced its financial results for the second quarter of fiscal year 2025, showing significant growth driven by its cloud and AI businesses. The results are compared to the corresponding period of the previous fiscal year.

Financial Highlights:

  • Revenue: Microsoft reported revenue of $69.6 billion, a 12% increase year-over-year.
  • Operating Income: The operating income for the quarter was $31.7 billion, reflecting a 17% increase.
  • Net Income: Net income for the quarter reached $24.1 billion, up 10%.
  • Diluted Earnings Per Share (EPS): EPS was $3.23, a 10% increase from the previous year.

Microsoft Q2 Earnings

AI and Cloud Business Performance:

  • The AI business has seen substantial growth, surpassing an annual revenue run rate of $13 billion, marking a 175% increase year-over-year.
  • Microsoft Cloud revenue was $40.9 billion, showing a 21% rise compared to the previous year.

Shareholder Returns: Microsoft returned $9.7 billion to shareholders through dividends and share repurchases during the quarter.

Future Outlook and Guidance

Microsoft is expecting strong financial performance for FY25 with double-digit growth in total revenue and operating income. Also, the company anticipates single-digit growth in operating expenses and a slight increase in operating margins. Additionally, the effective tax rate for the fiscal year is projected to be between 18% and 19%, reflecting efficient financial management and strategic investments.

Boards Statements

Satya Nadella, Chairman and CEO: “We’re making big strides in our tech and helping customers get the best out of AI. Our AI business has already hit a revenue run rate of $13 billion, up 175% from last year.”

Amy Hood, Executive Vice President and CFO: “This quarter, our Microsoft Cloud revenue was $40.9 billion, up 21% from last year. We’re focused on being efficient while continuing to invest in our cloud and AI infrastructure.”

These statements show Microsoft’s focus on AI and cloud growth, and their commitment to innovation and efficiency.

Impact on the Stock Market

Although Microsoft had strong earnings, their cloud revenue was $40.9 billion, just under the expected $41.1 billion. This caused some investor concerns. Microsoft’s stock fell 4% in premarket trading after the Q2 earnings report, mainly due to slower growth in Azure cloud services and worries about high AI spending, despite the overall good financial performance.

Microsoft Q2 Earnings

The Job Openings and Labor Turnover Survey (JOLTS), produced monthly by the U.S. Bureau of Labor Statistics (BLS), offers a comprehensive look at the health of the labor market. This report provides valuable insights into job vacancies, hiring trends, and employee turnover. Specifically, it details the number of job openings, the volume of new hires, and the rates of separations, which include voluntary quits, layoffs, discharges, and other forms of employee departure such as retirements.

By analyzing these metrics, the JOLTS report helps policymakers, economists, and business leaders gauge labor market demand and supply, assess the stability of employment, and identify trends in workforce mobility. For instance, a high number of job openings could indicate strong demand for labor, while a high quit rate might suggest that workers feel confident enough in the job market to leave their current positions for new opportunities. Overall, the JOLTS report is a crucial tool for understanding the dynamics of the employment landscape.

Job Openings and Labor Turnover – November

In November:

Job Openings: There were 8.1 million job openings, almost the same as before, but 833,000 fewer than last year. Jobs increased in some sectors like professional and business services, finance, and education but decreased in information.

Hires: 5.3 million people were hired, about the same as before, but 300,000 fewer than last year. The hiring rate stayed at 3.3%.

Separations: These include people leaving their jobs (quits), being laid off or fired, and other reasons like retirement or transfer. The total number of people who left jobs stayed at 5.1 million but was 287,000 fewer than last year. The rate was steady at 3.2%.

Quits: 3.1 million people quit their jobs, 218,000 fewer than before and 451,000 fewer than last year. The quit rate dropped to 1.9%. Quits were fewer in accommodation and food services, and arts and recreation.

Layoffs and Discharges: 1.8 million people were laid off or fired, which stayed the same as before but was 219,000 more than last year. The rate was steady at 1.1%. Layoffs increased in accommodation and food services.

Other Separations: There were 296,000 other separations, which didn’t change much.

For small businesses with 1-9 employees, layoffs decreased, but other rates didn’t change much. For large businesses with 5,000 or more employees, most rates stayed the same.

Impacts of JOLTs Report on the Stock Market

Job openings are high, and separations are low, it may indicate a strong labor market, boosting investor confidence and potentially leading to stock market gains. A stable or improving labor market can lead to positive economic outlooks.

The job report highlights a resilient labor market.

Picture of Shahryar Rahmani
Shahryar Rahmani

CEO and Co-Founder

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