Microsoft reported record first-quarter earnings on Wednesday, October 29, 2025, a performance driven by surging demand for its artificial intelligence and cloud computing services that overshadowed a significant global outage of its Azure platform hours earlier. The disruption affected a wide range of services, including Microsoft 365 and Xbox, impacting businesses and users worldwide, including in Kenya.

The technology giant announced revenue of $77.7 billion for the quarter ending September 30, 2025, an 18% increase year-over-year, surpassing analyst expectations of approximately $75.5 billion. Net income rose to $27.7 billion, with adjusted earnings per share at $4.13, also beating market forecasts. The robust financial results were largely attributed to the strong performance of its Intelligent Cloud division, which saw revenues of $30.9 billion. Revenue from Azure and other cloud services grew by 40%, highlighting the accelerating adoption of its AI-powered solutions.

"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, Microsoft's Chairman and CEO, in a statement released on October 29. The company's heavy investment in AI infrastructure was evident, with capital expenditures reaching a record $34.9 billion for the quarter, a 74% increase from the previous year, as it races to meet soaring demand.

Global Outage Highlights Digital Dependency

The strong earnings report was released just hours after Microsoft resolved a major global outage that began around 4:00 PM EAT (1:00 PM UTC) on Wednesday. The disruption stemmed from a faulty configuration change in Azure Front Door, a critical content delivery network service. For several hours, users globally, including in Europe, Asia, and the United States, experienced latency, timeouts, and errors across a suite of Microsoft services such as the Azure Portal, Microsoft 365, Teams, Outlook, and Xbox Live. The outage, which lasted approximately five to eight hours before full resolution, also affected third-party companies that rely on Azure, including airlines and retailers.

While specific data on the outage's impact on Kenyan businesses was not immediately available, previous global disruptions have affected local operations, including those of Kenya Airways. The incident serves as a critical reminder of the region's growing dependence on a few dominant cloud providers. With Microsoft Azure holding a significant share of the global cloud market, such outages pose operational risks for Kenyan enterprises that leverage these platforms for essential services.

Kenyan Relevance: A Billion-Dollar Bet on East Africa

The earnings and the outage come as Microsoft deepens its investment in East Africa. In May 2024, Microsoft, in partnership with UAE-based AI firm G42, announced a landmark $1 billion investment in Kenya's digital ecosystem. The centerpiece of this investment is the construction of a geothermal-powered data centre in Olkaria, Naivasha, which will establish a new Microsoft Azure East Africa Cloud Region. This facility, expected to be operational within two years, aims to provide secure and high-speed cloud and AI services to businesses and governments across the region.

This strategic move positions Kenya as a digital hub for East Africa and is aligned with the country's National Digital Masterplan. The investment also includes initiatives for developing Swahili-language AI models, establishing an innovation lab in Nairobi to support startups, and expanding internet connectivity to 20 million people in Kenya by the end of 2025. The increased local presence of Azure infrastructure could mitigate latency for Kenyan customers but also heightens the potential impact of any future service disruptions on the national economy.

Market Context and Future Outlook

The impressive financial results were also buoyed by a revised equity agreement with OpenAI, the developer of ChatGPT. Announced on Tuesday, October 28, 2025, the deal gives Microsoft a 27% stake in OpenAI's new for-profit entity and helped push Microsoft's market capitalization past the $4 trillion mark. Despite the strong earnings, Microsoft's shares saw a slight dip in after-hours trading, reflecting investor concerns over the massive capital expenditures on AI and the need to see proportional returns on these investments. The company has indicated that spending will continue to increase to build out its AI and cloud capacity, signaling its long-term commitment to leading the AI transformation.