Key Points
- Microsoft announces a massive share buyback program, $60 Billion, approved by its board.
- The company declares a quarterly dividend of $0.83, a 10% rise from the previous quarter.
- Microsoft’s capital spending surged due to heavy investments in AI infrastructure. The company expects growth in its Azure cloud division by fiscal 2025.
- The buyback follows similar moves by other tech companies, such as Apple, which announced a $110 billion buyback program earlier this year.
Microsoft announced Monday that its board has approved a new share buyback program valued at up to $60 billion. Additionally, the tech giant declared a quarterly dividend of $0.83 per share, an 8 cent, or 10%, increase over the previous quarter. This comes as Microsoft prepares for its annual shareholders meeting, set for December 10.
Microsoft has invested heavily in artificial intelligence (AI) infrastructure, increasing capital expenditures. In July, Microsoft reported a 77.6% increase in capital spending for the quarter ending June 30, largely due to AI-related investments. Although Microsoft’s Azure cloud business experienced a slowdown in growth during that quarter, the company expects a rebound in the second half of fiscal 2025.
Microsoft and other major tech companies, like Google’s parent company Alphabet, are under increasing pressure from investors to demonstrate returns on their AI investments. While many firms have not seen substantial financial gains from AI, Microsoft has been one of the few companies explicitly reporting AI contributions in its quarterly earnings. In a recent restructuring, Microsoft shifted some of its search and news advertising revenue under its Azure cloud-computing unit, aligning its business segments more closely with its AI focus.
The stock market has responded favorably to Microsoft’s moves, with the company’s shares rising slightly in after-hours trading. Microsoft’s stock has gained approximately 15% year-to-date, reflecting investor confidence in its strategic direction.
In comparison, other tech giants like Apple have also focused on returning value to shareholders through buybacks. Apple unveiled a record $110 billion share buyback program in May, following strong quarterly earnings. These buyback initiatives reflect a broader trend among tech companies to manage shareholder expectations while balancing large investments in AI and other emerging technologies.
