Microsoft reports strong earnings as Azure hit by major outage

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Microsoft blew off concerns of overspending on AI on Wednesday, reporting elevated earnings even as it faced an outage of its cloud computing service, Azure, and its office software suite, 365.The strong earnings report comes a day after a deal with OpenAI pushed the value of the tech giant to more than $4tn.After its Xbox and investor relations pages went down, the company issued a statement that said: “We are working to address an issue affecting Azure Front Door that is impacting the availability of some services.”The outage did not dampen the software giant’s financial outlook.The company reported first-quarter earnings of $3.

72 per share against analysts’ expectations of $3.68, and revenue of $77.7bn against expectations of $75.5bn, according to Bloomberg consensus estimates.That’s up from the $3.

30 per share and $65,6bn in revenue the company saw in the same quarter last year,Microsoft’s closely watched Azure cloud business grew by about 40%, also topping expectations,Operating income increased 24% to $38bn, more than projected,The company said its net income was $27.

7bn,“Our planet-scale cloud and AI factory, together with Copilots across high-value domains, is driving broad diffusion and real-world impact,” said Satya Nadella, chair and chief executive officer of Microsoft,“It’s why we continue to increase our investments in AI across both capital and talent to meet the massive opportunity ahead,”The company reported spending a larger-than-expected $34,9bn on new AI-related projects over the quarter, a 74% increase from the same period a year ago.

Microsoft’s earnings report comes as investors welcomed a revamped deal with OpenAI this week that has the once not-for-profit AI venture move toward becoming a for-profit entity and ties Microsoft more closely to the company,Under the new agreement, Microsoft will hold 27% of the OpenAI Group PBC, valued at roughly $135bn, while OpenAI’s non-profit arm will hold a $130bn stake in the for-profit,The earnings report gives Wall Street its latest look at the company’s AI and cloud growth,Graphic chipmaker Nvidia crossed a threshold on Wednesday to become the first company valued at $5tn as prospects for a US-China trade deal improved,The wider US stock market reached record highs earlier in the week, buoyed by hundreds of billions of dollars of investment in AI.

Microsoft’s earnings, along with Meta and Google parent Alphabet on Wednesday, begin a week of reports from the “Magnificent Seven”, the most valuable publicly traded companies in the world.Investor anxiety over the possible inflation of a market bubble in AI-related investment similar to overinvestment in the mid-to-late 1990s have been growing.But bubbles are not necessarily visible until they burst.Sign up to TechScapeA weekly dive in to how technology is shaping our livesafter newsletter promotionOn an earnings call, Microsoft’s CFO, Amy Hood, sought to calm fears of an AI investment bubble, explaining that the company’s aggressive expansion in AI capacity, up 80% this year, and data centers doubling in size over the next two – was to meet demand that was already booked.“Our need to continue to build out infrastructure is very high and that’s for booked business today and not any new booked business,” Hood said, adding that the company had been short of processing capacity for several quarters.

“I thought we were going to catch up but we are not,” Hood said.“Demand is increasing and usage is increasing very quickly.When you see these kinds of demand signals, and we know are behind, we need to spend.But we’re spending with a different amount of confidence in usage patterns and bookings, and we feel good about that.”But, she warned, Microsoft is still “likely to be short of capacity”.

AI-related and cloud computing companies are valued at a combined $20tn, and gains across the market are 18% in 2025, or about $3.3tn, according to Reuters.Investors typically want to see that returns on AI capital spending, or CapEx, are following as the markets continue to reach record highs.Microsoft, Alphabet, Meta and Amazon are projected to pump hundreds of billions into capital expenditures in their upcoming year, mostly into the construction of datacenters and associated infrastructure for artificial intelligence.Investors may be undeterred even without strong signs of revenue growth and settle for signs of strong AI adoption.

The Dow Jones Industrial Average hit a milestone of 47,943 on Wednesday morning,“With five of the Mag Seven reporting this week, what the market expects to hear is confirmation that all this AI CapEx is coming through, that the revenues and profits from AI are coming through,” Scott Wren, senior global market strategist at Wells Fargo Investment Institute in St Louis, Missouri, told Reuters this week,Part of the AI economic boom is likely to come from cost savings,Microsoft announced at the start of the summer that it would cut about 9,000 jobs,Amazon is reported to be planning to cut as many as 30,000 corporate jobs, or 10% of workers in the white-collar division, to compensate for over-hiring during the peak demand of the pandemic.

With the application of AI-technologies, company managers are increasingly asked to justify hiring a human, with additional costs in health insurance and pension, along with HR and other management officials, when the role could be performed by AI.As a result, human resource divisions are likely to be the first to be scaled back as AI takes hold.
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Councils in England face clampdown on four-day working weeks

The local government secretary, Steve Reed, is seeking to clamp down on councils introducing four-day working weeks after writing to South Cambridgeshire warning that the policy had damaged performance.Reed told the council, which is the only local authority to formally trial a four-day week for staff, that they risked worsening public services and value for money.His letter, first seen by the Telegraph, marks the first intervention by the Labour government on shortened working weeks in local government in England.Reed wrote to Bridget Smith, the council’s Liberal Democrat leader, noting there had been a deterioration in rent collection and repairs by the council.“The independent report shows that performance declined in key housing-related services including rent collection, reletting times and tenant satisfaction with repairs, especially where vulnerable residents may be affected,” he wrote

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HMRC pauses child benefit crackdown after 23,500 families caught up in data error

The UK tax authorities have announced they will no longer cut off parents’ child benefit payments after a new crackdown on overseas fraud backfired due to incomplete Home Office travel data.The flawed data led to HMRC suspending 23,500 payments in recent weeks, including for many families who had simply gone on holiday without the Home Office recording their return.New mistaken suspensions reported in the last 24 hours included that of a woman who travelled to Amsterdam for work in June 2023 – long before she became a mother.She said: “I have one biological child. I received a letter from HMRC stating that I went to the Netherlands in June 2023 and never returned

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Hundreds of hospice beds and staff cut in England amid funding crisis

Hospices in England are cutting hundreds of beds and staff because of a funding crisis, despite a sharp rise in demand for palliative care, a damning report warns.People needing end of life care faced a postcode lottery because access to services was so patchy, the National Audit Office (NAO) reported.A lack of government oversight meant ministers were unaware of how reliant they were on independent hospices, its 52-page report found.The NAO said nearly two-thirds of independent hospices in England reported a deficit in 2023-24. Overall expenditure was £78m more than income generated

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‘No more children are going to die like you’: how Sheffield mother kept her promise to boys killed by father 11 years ago

When Claire Throssell held her dying son Jack in her arms, she made him a promise: that no more children would die in the circumstances he had – at the hands of a violent parent, on a court-ordered unsupervised visit.Jack and Paul, then aged 12 and nine, were killed by their father 11 years ago, when he lured them into the attic with a new train set, barricaded the house shut and used Throssell’s possessions to set 14 separate fires.“When I held him in my arms, just like I did Paul,” she said, “I made him one last promise. I said to him: ‘No more children are going to die like you.’”Last week, on the anniversary of the fire, she was invited to meet the prime minister in Downing Street, as the government announced that it planned to repeal the presumption that children should have contact with both parents, under which decisions are made in the family court

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NHS makes morning-after pill available for free across pharmacies in England

The NHS has made the morning-after pill available for free across pharmacies in England in an effort to reduce a “postcode lottery” of access to emergency contraception.Almost 10,000 pharmacies are now able to offer the pill without charge, saving those in need of free emergency contraception from having to visit their GP or to get an appointment at a sexual health clinic.Some pharmacies were previously charging as much as £30 for emergency oral contraception.The NHS’s national clinical director for women’s health, Dr Sue Mann, said the expansion was “one of the biggest changes to sexual health services since the 1960s” and “a gamechanger in making reproductive healthcare more easily accessible for women”.“Instead of trying to search for women’s services or explain their needs, from today women can just pop into their local pharmacy and get the oral emergency contraceptive pill free of charge without needing to make an appointment,” she said

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Five more prisoners freed in error after sex offender’s release from Essex jail

Five other prisoners have also been released by mistake in the same week a convicted Ethiopian sex offender was allowed to walk free from an Essex jail, says the prison officers’ union.The disclosure of further mistakes highlights the intense pressure on prison staff, according to the Prison Officers’ Association (POA).Last Friday, Hadush Kebatu was mistakenly released from HMP Chelmsford after being sentenced to 12 months in jail in September for sexually assaulting a woman and a 14-year-old girl while living in an asylum hotel in Epping.After a two-day manhunt he was tracked down in north London and returned to detention.His mistaken release inflamed public anger, given his case had already caused unrest across England and Wales over the summer, with many demonstrators rallying against asylum accommodation and voicing anti-immigration sentiments