Microsoft profits soar days after announcing thousands of layoffs

Technology giant Microsoft says its profits for the three months to the end of September jumped to more than $36.6bn (£27.5bn), just days after announcing plans to cut its workforce by more than a quarter.

On Monday, the Windows developer said it would offer buyouts to around 60,000 of its workers to cut costs as it pours billions of dollars into artificial intelligence (AI).

Like other tech firms, Microsoft is investing heavily in the infrastructure that powers AI even as questions remain over whether such huge spending will pay off.

Microsoft shares rose by almost 2.9% in after hours trading in New York on Wednesday.

The recent financial results of tech companies have been closely watched by investors as they gauge whether the heavy spending on AI is sustainable.

Microsoft said on Wednesday that its quarterly revenue rose to $92.3bn - up 19% from a year earlier - driven by strong growth in its cloud computing business.

Microsoft also flagged risks, including "substantial investments" in AI, among other uncertainties that could impact its finances.

The firm's chief executive Satya Nadella said AI development has helped grow the adoption of the technology and has delivered "real-world impact across every industry."

This week, the company said it would extend a voluntary redundancy offer to eligible employees in teams across Canada, India, the UK and US to adapt its workforce to "changing needs".

It will create "greater flexibility" for the firm and allow workers to leave with financial support and career planning resources, Microsoft said.

The company currently employs more than 220,000 people around the world.

Microsoft's stronger-than-expected earnings contrasted with Alphabet, as the owner of Google disappointed investors with its financial results on Wednesday.

The firm's shares fell by 9.75% after it reported a 25% drop in quarterly net profit from a year earlier while continuing to spend heavily on AI.