Microsoft announced it is extending the expected useful life of its data centers from 15 to 25 years, a change CFO Amy Hood attributed to the company's operating history and expected use of its assets. The company disclosed Azure cloud platform revenue publicly for the first time, reporting $33.2 billion for the quarter, a 48 percent year-on-year increase representing 36 percent of total company revenue. Microsoft brought 24 new data centers online across five continents during the period, while reporting capex of $45.2 billion, below the expected $50.7 billion due to delays from neocloud partners including CoreWeave, Nscale, Lambda, Iren, and Nebius. Annual capex guidance for 2027 was revised down to $170 billion from $175 billion.
Extending data center useful life from 15 to 25 years allows Microsoft to spread depreciation costs across a longer period, materially affecting its reported financials and setting a precedent that other large operators may follow for accounting purposes. The first-ever public disclosure of Azure's quarterly revenue, at $33.2 billion, provides the industry a concrete benchmark for the scale of cloud infrastructure demand driving current data center construction.
Microsoft's revelation about a 25-year data center lifespan, combined with strong cloud earnings and lower capex guidance, is a significant financial and infrastructure strategy story for a leading hyperscaler. This is distinct from any previously published Microsoft story in the digest.