Microsoft’s cloud business recently crossed a major milestone, but the company still isn’t telling investors the full story, a report has said. CEO Satya Nadella revealed on an earnings call that Azure’s annual revenue has topped $100 billion for the first time – which is a rare disclosure from a company that has long kept its cloud numbers under wraps. Yet even this headline figure hasn’t been enough to satisfy analysts, who reportedly say Microsoft's financial reporting remains far less transparent than its biggest rivals. Across three key pillars shaping the company’s AI future, its cloud business, its capital spending and its ties with OpenAI, Microsoft's disclosures fall noticeably short of what shareholders would ideally want to see, as per a report by The Wall Street Journal.
In its most recent annual report, Microsoft simply stated that “Azure and other cloud services revenue increased 41%” for the fiscal year ending June 30. Notably absent were the actual dollar figures, comparison numbers from the previous year, and any breakdown of expenses or profits tied specifically to Azure. During Microsoft’s July earnings call, Nadella did offer one unusual nugget, revealing that Azure's annual revenue had crossed the $100 billion mark. Instead of breaking Azure out on its own, Microsoft folds it into a broader category called “Intelligent Cloud,” which also includes older legacy software products. This leaves investors guessing where the legacy revenue stops and Azure’s actual growth begins. Compare this to Amazon, which reports Amazon Web Services, the largest cloud provider globally, as its own separate segment complete with sales figures, expenses, and margins. Azure ranks second in the cloud market, yet its financial details remain largely hidden from public view.
Microsoft’s cash-flow statement showed $115.9 billion spent on property and equipment last year, a figure the company itself used to calculate free cash flow. However, in a separate release, the company reported total capital expenditure of $145.3 billion, a number that included assets acquired through finance leases. While Microsoft does share separate figures for finance leases, simply adding them to the property and equipment spending doesn't actually match the $145.3 billion total, and the company hasn't offered any explanation reconciling the difference.
This lack of segment-level clarity carries the biggest consequences for investors trying to understand where Microsoft's money is actually going. Most of the company’s massive capital spending is being funnelled into Azure, the platform running on an enormous web of data centers that powers much of today’s internet and fuels many AI models. By burying Azure inside the broader Intelligent Cloud segment, Microsoft effectively conceals the true margins, costs and capital intensity behind its AI expansion. This blending mixes an expensive AI infrastructure business with a separate, high-margin software business, making it impossible to see how profitable Azure actually is on its own. Intelligent Cloud is one of Microsoft's three operating segments and accounted for 42% of total sales last year. Its revenue climbed 30% to roughly $138 billion, while the cost of that revenue rose even faster at 44%, reaching $58 billion. Operating expenses grew 7% to $23 billion, leaving operating income at about $57 billion, up 28% from the year before. Somewhere buried within these combined figures sits Azure's actual performance, numbers Microsoft has chosen not to disclose separately. Yet oddly, the company provides far more detailed breakdowns for much smaller businesses, like Xbox and LinkedIn, which brought in about $22 billion and $20 billion respectively last year.
