Microsoft beats quarterly revenue estimates

(Reuters) - Microsoft on Tuesday beat Wall Street estimates for first-quarter results in all segments, driven particularly by strength in its cloud computing and PC businesses.

The company's revenue rose 13% to $56.5 billion in the quarter ended Sept. 30, compared with analysts' consensus estimate of $54.52 billion, according to LSEG data.

Microsoft shares gained 5% in after-hours trading.

Revenue from Microsoft's Intelligent Cloud unit, which houses the Azure cloud-computing platform, grew to $24.3 billion, compared with analysts' estimate of $23.49 billion, LSEG data showed. Azure revenue rose 29%, higher than a 26.2% growth estimate from market research firm Visible Alpha.

The company does not break out the absolute revenue figure for Azure, the part of Microsoft's business best situated to capitalize on booming interest in artificial intelligence.

Wall Street is looking at how generative AI services may benefit Microsoft, which secured an early lead with investments in startup OpenAI, owner of the popular ChatGPT service.

Microsoft said on Tuesday that its fiscal first-quarter profit was $2.99 per share, above analyst estimates of $2.65 per share, according to LSEG data.

Microsoft is weaving AI into its own products, such as the $30-a-month "Copilot" for its Microsoft 365 service that can summarize a day's worth of emails into a quick update. While the tool is being shown only to a small number of pilot customers until it becomes available next month, it requires businesses to make a number of upgrades to their Microsoft-based systems in order to use Copilot. Analysts say this could generate sales for the Redmond, Washington, company ahead of Copilot's wide release.

Investors are also tracking how much Microsoft spends on the massive data centers to power AI software. Microsoft said on Tuesday that fiscal first-quarter capital expenditures were $11.2 billion, up from $10.7 billion in the previous quarter, which itself was the biggest spend since at least fiscal 2016.

Sales of its Windows operating system and other products in the segment grew to $13.7 billion, compared with analysts' consensus estimate of $12.82 billion, according to data from LSEG.

The segment containing the LinkedIn social network and its office productivity software grew to $18.6 billion, compared with analysts' consensus estimate of $18.20 billion, according to LSEG data.

(Reporting by Yuvraj Malik in Bengaluru, and Anna Tong and Stephen Nellis in San Francisco; Editing by Devika Syamnath, Peter Henderson and Matthew Lewis)