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 its workforce by more than a quarter.

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

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

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

The recent financial results of tech companies have been closely watched by investors as they gauge whether the heavy spending on AI 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 for 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 grow the adoption of the technology and has delivered "real-world impact across every industry."