Microsoft

Azure, Microsoft's cloud platform, just grew 40 percent year over year. The total Microsoft Cloud business reached 54.5 billion dollars in the quarter, growing 29 percent. Even more impressive, the commercial backlog of contracts customers have already signed jumped 99 percent year over year to 627 billion dollars. That is roughly two years of total company revenue locked in.

Microsoft's AI business is now generating revenue at a 37 billion dollar annual run rate, up 123 percent from a year ago. That includes Copilot subscriptions inside Office, GitHub Copilot for developers, and Azure AI services for enterprises. Earnings per share grew 23 percent to 4.27 dollars in the quarter, and operating margins held at a fat 46 percent.

Microsoft is spending tens of billions of dollars per quarter on data centers and AI chips to keep up with demand. If Azure growth ever slows, those buildings turn into expensive overhead. The company also depends heavily on its OpenAI relationship, and any change in that partnership could shift the AI competitive landscape overnight.

The More Personal Computing segment, home to Windows, Surface, and Xbox, fell 1 percent this quarter. Windows OEM revenue is down 2 percent and Xbox content fell 5 percent. The PC and gaming halves of Microsoft are not growing, which means the entire investment story now rests on Azure and AI continuing to deliver.