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 more than a quarter of its workforce.

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

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

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

Investors have been closely watching recent tech earnings as they gauge whether heavy AI spending is sustainable.

Big tech companies like Amazon, Meta and Alphabet are expected to spend more than $700bn this year on AI chips and infrastructure like data centres.

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.

Its earnings were lifted by a 30% increase in revenue from Microsoft Cloud, its range of enterprise technology services.

The firm 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 increase adoption and 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".

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

The company employs more than 220,000 people worldwide.

Microsoft's stronger-than-expected earnings contrasted with Alphabet, Google's parent company, which 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 and said it will continue to spend heavily on AI.