Microsoft reported quarterly revenue and profits ahead of analysts’ expectations, with Azure revenue growth climbing to 40% as the company continued to deal with the effects of a widespread cloud outage.

The company’s capital expenditures reached a record high of $34.9 billion — reflecting the company’s long-term buildout of cloud infrastructure to meet demand for artificial intelligence. The company had projected capital spending of more than $30 billion for the quarter.

Along with that unprecedented buildout, Microsoft sought to address investor concerns about a potential AI bubble, by highlighting its commercial remaining performance obligation (RPO), a measure of future contracted revenue. That backlog grew 51% year-over-year to $392 billion.

The company also disclosed for the first time that this RPO has a weighted average duration of roughly two years, a move intended to show investors that its record capital spending is supported by strong, long-term customer demand.

Revenue was $77.7 billion for the quarter ended Sept. 30, Microsoft’s first quarter of fiscal 2026. That was up 18%, and compared with average analyst expectations of $75.39 billion. The company said the result was driven by strong demand for cloud and AI services.

Profits were $27.7 billion, or $3.72 per share, beating expectations of $3.66 per share.

Earlier Wednesday, an Azure cloud services outage disrupted operations for customers worldwide including Alaska Airlines, Xbox users and Microsoft 365 subscribers. Microsoft reported as of early afternoon that it was rolling back the faulty configuration and that customers should see improvements.

Microsoft stock was down by about 3% in after-hours trading. The company’s market value reached $4 trillion after the announcement of its new OpenAI deal on Tuesday morning.

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The current AI investment cycle, despite the colossal market capitalization gains seen in mega-cap technology firms, remains firmly in its “early innings,” according to John Belton, Growth Portfolio Manager at Gabelli Funds. This assertion, shared during a recent discussion on CNBC’s “The Exchange” with Dom Chu, Tim Seymour, and Barbara Doran, challenges the notion that […]

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With a new OpenAI partnership in hand, Microsoft is going into its earnings report Wednesday afternoon with a resolution to one of the biggest questions about its business.

The company’s market value reached $4 trillion again as Wall Street reacted to the details of the new Microsoft-OpenAI agreement, which gives Microsoft a 27% equity stake in OpenAI’s new for-profit entity, and a commitment for $250 billion in cloud purchasing by the ChatGPT maker.

Analysts expect the tech giant to report another strong quarter, fueled primarily by continued momentum in its Azure cloud business and growing adoption of its Copilot AI tools.

Quarterly revenue is expected to be about $75.4 billion for the first quarter of Microsoft’s 2026 fiscal year, which ended Sept. 30, according to numbers tracked by Yahoo Finance. That would represent a 15% jump compared to the $65.6 billion reported in the same period last year. 

Analysts expect earnings per share of $3.66, up about 11% year-over-year from $3.30.

Investors will be paying close attention to the growth rate in Microsoft’s Azure cloud business, with some analysts expecting as much as 39% growth (in constant currency, excluding the impact of exchange rates). Hitting this mark would exceed the company’s prior guidance and maintain the 39% growth pace set in the previous quarter.

Yet the potential for an AI bubble will no doubt be the focus of questions on company’s earnings conference call. Amid surging investment and growing valuations in the AI sector, some analysts and tech leaders are warning that the enthusiasm could outpace the business realities

Microsoft and Google parent Alphabet will both report numbers on Wednesday afternoon, and Amazon the following day, making for quick comparisons across the major cloud platforms.

As of the most recent quarter, ended in June, Microsoft reported more than $75 billion in annual Azure revenue for its just-ended fiscal year, compared to an annual run rate that had surpassed $50 billion for Google Cloud and a run rate of nearly $124 billion for Amazon Web Services (based on its $30.9 billion revenue in the June quarter).

Check back with GeekWire on Wednesday afternoon for full coverage.

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The burgeoning influence of artificial intelligence presents a dual narrative for tech giants, particularly Alphabet, as it navigates both profound opportunities and existential threats to its established revenue streams. As CNBC’s MacKenzie Sigalos reported on “Worldwide Exchange,” ahead of Alphabet’s recent earnings call, the company finds itself at a critical juncture, balancing the burgeoning momentum […]

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JetBlue Q3 2025 Results: Smaller Loss and Strong Premium Demand Show Resilience in the U.S. Airline Market!

JetBlue Airways has reported a smaller-than-expected loss for its third-quarter performance, largely due to consistent demand for premium travel services and effective cost-control measures. The New York-based airline managed to cushion its margins amidst a challenging economic landscape and rising operational costs.

Premium Travel Services Remain Resilient Amid Economic Challenges

Despite the ongoing uncertainty in the U.S. domestic market, JetBlue, along with larger competitors such as United Airlines, American Airlines, and Delta Air Lines, has experienced a sustained demand for high-margin premium services. Affluent travelers have continued to prioritize added comfort and are willing to pay a premium for these services, which has helped keep JetBlue’s revenue streams steady.

The airline has been able to weather the challenges posed by a slowdown in domestic travel and broader economic uncertainty through the continued strength of its premium offerings. As many carriers have scaled back capacity on domestic routes to help mitigate costs, JetBlue has relied on these premium services to maintain a more resilient financial performance.

Challenges of Rising Costs and Aircraft Groundings

While JetBlue has benefitted from strong demand for premium services, it has faced its own set of challenges. The airline, which had initially aimed to achieve breakeven operating margins in 2023, had to scale back its expectations due to high operating costs. A major contributing factor to these elevated costs has been the grounding of aircraft due to issues related to Pratt & Whitney engines, manufactured by RTX. These groundings have disrupted JetBlue’s operations and added unexpected financial strain.

In response to rising costs, the airline has taken several steps to tighten its spending. These include exiting unprofitable routes, deferring aircraft deliveries, and pausing plans for cabin upgrades. The decision to streamline operations by cutting back on less profitable routes is aimed at conserving resources and improving efficiency while JetBlue navigates the financial pressures.

Lower Expectations for Fourth-Quarter Unit Revenue

Looking ahead to the fourth quarter of 2023, JetBlue has tempered its expectations. The airline forecasts that its unit revenue, a key indicator of pricing power, will be flat to down by as much as 4% compared to the previous year. This decline reflects a softening in demand in some areas, despite an earlier surge in fare prices. Last year, strong demand helped drive fares higher, but with economic uncertainty still looming, this boost is not expected to continue into the fourth quarter.

Despite this anticipated decline, JetBlue remains optimistic about the demand environment. Marty St. George, the airline’s President, stated that he remains confident that the demand for air travel will continue to improve through the end of the year. This optimism is shared by other airlines, which are also banking on a rebound in travel demand as the economy stabilizes.

A More Cautious Outlook for Unit Costs in 2025

JetBlue has also revised its 2025 forecast for unit costs, excluding fuel. The airline now expects unit costs to rise by 5%-6%, a slight reduction from its earlier estimate of a 5%-7% increase. This more cautious outlook is a response to the company’s ongoing focus on controlling operational costs and ensuring that it remains profitable despite rising expenses. The reduction in the cost growth forecast reflects JetBlue’s efforts to optimize efficiency and adapt to the challenges in the airline industry.

Third-Quarter Financial Performance: Adjusted Loss and Revenue Figures

JetBlue’s third-quarter performance showed a significant improvement in terms of revenue and operational efficiency, even as it posted an adjusted loss of 40 cents per share. The loss was smaller than Wall Street’s expectations, which had predicted a 44-cent loss per share. This outcome highlights the company’s ability to manage costs effectively while still facing challenges in a competitive industry.

For the third quarter, JetBlue reported total operating revenue of $2.32 billion, which met analysts’ expectations. Although the company faced high costs due to operational disruptions, it was able to generate sufficient revenue to meet its financial targets. This reflects JetBlue’s strong brand presence and its continued appeal to premium travelers, which has allowed it to weather some of the challenges facing the broader industry.

Focus on Cash Flow and Shareholder Value

JetBlue’s strong cash flow generation has been a critical factor in maintaining the airline’s financial stability. The company has been using this strong cash flow to return value to its shareholders. During the third quarter, JetBlue repurchased 816,028 common shares for $17.6 million, a move aimed at increasing shareholder returns. Additionally, the airline declared a quarterly dividend of $0.05 per share, further demonstrating its commitment to delivering value to investors.

With $30.8 million in cash and $80.8 million in total liquidity, JetBlue is in a strong financial position, which will help it navigate the challenges of the airline industry and continue to invest in its future growth. The company’s capital allocation strategy remains focused on maintaining financial flexibility, which is essential as it prepares for future expansion and market demands.

JetBlue’s Long-Term Financial Goals: Operating Profit Forecast

Looking further ahead, JetBlue is projecting an earnings before interest and taxes (EBIT) of between $850 million to $950 million by the end of 2027. This forecast underscores JetBlue’s confidence in its ability to execute its long-term growth strategy, which includes expanding its premium services, improving operational efficiency, and maintaining strong relationships with both customers and investors.

Despite the current challenges in the airline industry, JetBlue’s long-term prospects remain strong. The company’s ability to adapt to changing market conditions, along with its focus on cost control, operational efficiency, and premium services, positions it well for future growth.

Conclusion: JetBlue’s Resilience Amid Challenges

While JetBlue Airways continues to face some significant operational challenges, its third-quarter results reflect the airline’s resilience in navigating a tough industry environment. The company’s consistent efforts to control costs, expand premium services, and maintain strong cash flow generation highlight its potential for long-term success.

As the airline looks toward the fourth quarter of 2023 and beyond, it will continue to monitor the demand environment and adjust its strategies accordingly. Although the company’s forecast for the remainder of 2023 is more cautious, its long-term outlook remains optimistic, with a strong focus on growth, profitability, and shareholder value.

For travelers, JetBlue continues to be a solid choice for high-quality air travel, especially for those seeking premium services and comfort. With the company’s ongoing efforts to innovate and improve the travel experience, passengers can expect JetBlue to remain a prominent player in the airline industry for years to come.

[Source: Reuters]

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