Microsoft Still Has More Cloud Business Than It Can Manage

Microsoft CFO Amy Hood began 2025 by saying that the company had more demand for its cloud computing services than it had the capacity to handle.

Azure revenue in Q1 was up 40% from a year ago.

Nearly a year later, it’s still true, Andrew Nusca reported for Fortune Tech.

Microsoft said recently that its first-quarter cloud computing revenue jumped 26% to $49.1 billion from the same period a year ago, as customer demand continues to swell.

What’s more, Microsoft will remain capacity-constrained for the remainder of the fiscal year, Hood said.

The mix of the AI boom and longstanding corporate relationships has been good to Microsoft. For Q1, the company beat analyst expectations with earnings of $3.72 per share on revenue of $77.7 billion.

Wall Street had been looking for $3.67 per share on revenue of $75.33 billion.

Azure revenue in Q1 was up 40% from a year ago. Microsoft’s “Intelligent Cloud” unit—which includes Azure as well as AI services, business applications, databases, and the Internet of Things—recorded quarterly revenue of $30.9 billion, up 28% year-on-year.

Like Mark Zuckerberg, CEO Satya Nadella said he had no intention of taking his foot off the gas:

“We continue to increase our investments in AI across both capital and talent to meet the massive opportunity ahead.”