Here's what tech leaders need to know.

Growth is Extremely Strong

31% Microsoft Azure growth at their massive revenue base is very impressive. It's 1-2 points slower than previous quarters but remains an amazing achievement.

Even excluding AI, Azure's core services grew at 18% - a very healthy clip. This indicates continued momentum in traditional cloud migration and modernization.

For the next quarter, Azure is expected to continue strong growth of 31-32%.

AI is More Than Hype

With Microsoft AI services now at $13Bn run rate, while contributing 13 points to Azure growth, we're seeing real enterprise adoption, not just experimentation.

⚡ $19.5Bn Jump in Commits in 90 days = Customer Confidence is High

Commitments: $149Bn (estimated as 50% of total Microsoft Cloud, likely even higher)

The $19.5Bn increase in cloud commitments this quarter (from $129.5Bn last quarter) signals that enterprises continue to make long-term bets on cloud and AI infrastructure.

Think about it - Azure's estimated backlog jumped almost $20Bn. In other words, Microsoft's remaining performance obligations grew 34% IN ADDITION to Azure revenue growth of 31%.

Infrastructure Investment Follows

To support this demand, Microsoft's CapEx increased 13% last quarter to $22.6Bn.

The market had been eagerly awaiting comments from Satya Nadella on whether he'd confirm the $80Bn CapEx promised for this fiscal year.

Microsoft has already increased CapEx 13% quarter-over-quarter from $20Bn in Q1 to $22.6Bn in Q2, spending $42.6Bn of the promised $80Bn in just the first half of their fiscal year.

For the next two quarters, they expect spending similar to Q2 levels, effectively confirming the $80Bn CapEx target despite recent market concerns about DeepSeek AI.

DeepSeek model itself is now available on Microsoft Azure.

Why it’s Fantastic News for Alliance and Marketplace Leaders

For tech leaders, this data suggests we're entering a new phase where AI is driving meaningful revenue alongside enterprise cloud adoption.

The growth in commitments indicates customers are positioning themselves for multi-year transformation, not just tactical projects.

Notably, customers are increasingly leveraging these rapidly growing commitments on cloud marketplaces to buy third-party software, further consolidating their software spend within the top three cloud ecosystems.

Will other hyperscalers match this pace? I’ll cover it in next week’s newsletter