Microsoft’s AI business crosses $37B run rate as Azure growth hits 40%

The most important Microsoft number this week was not total quarterly revenue. It was the line saying the company’s AI business has now surpassed a $37 billion annual revenue run rate. In the official results released on April 29, Microsoft said that figure was up 123% year over year. That changes the frame around AI spending. The question is no longer whether Microsoft can convert infrastructure intensity into sales. It already is.

The surrounding figures make the point harder to dismiss as a one-off headline. Microsoft reported $82.9 billion in revenue for the quarter, up 18%, with Microsoft Cloud revenue reaching $54.5 billion, up 29%. Intelligent Cloud revenue came in at $34.7 billion, and Azure plus other cloud services revenue rose 40%. Then there is the backlog number: commercial remaining performance obligation climbed 99% to $627 billion. That suggests enterprise customers are not just testing AI tools at the edge. They are signing up for larger, longer commitments that will flow into future revenue.

What stands out is how Microsoft is monetizing AI through its existing enterprise stack rather than relying on a single breakout product. Azure remains the distribution layer, but the economics also ride through Microsoft 365, Dynamics 365, and broader cloud agreements that companies already understand how to buy. In other words, the company is turning frontier-model demand into contractable enterprise software and cloud spend, which is a much sturdier position than living off API hype alone.

The next argument will be about margins, not demand. Microsoft still has to prove that data center buildout and accelerator costs will not outrun software leverage. But the numbers in this quarter move the debate. With Azure growing 40%, AI revenue running at $37 billion, and committed backlog at $627 billion, Microsoft has pushed AI out of the demo phase and into the part of the business that boards and CFOs actually measure.