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Microsoft reported it beat analysts’ estimates during its third-quarter earnings call on Wednesday.
“Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth,” Satya Nadella, chairman and chief executive of Microsoft, said in a press release published ahead of the Q3 call. “From AI infra and platforms to apps, we are innovating across the stack to deliver for our customers.”
Ahead of Microsoft’s earnings call on Wednesday, analysts at Piper Sandler said Microsoft “is in an enviable position as the world’s largest software platform.” Still, investors could be hypersensitive to Azure and the company’s capital expenditure metrics.
Microsoft’s stock rose over 5.5% in after-hours trading after the earnings report was released.
“Bottom-line, capex-heavy models like MSFT and ORCL (among others) may face rising investor scrutiny, elevating near-term volatility on downstream policy and tariff implications,” the analyst note, published April 24, said.
Here are the key numbers for the third quarter compared to analysts’ estimates compiled by Bloomberg:
- Earnings per share: $3.46 vs. $3.21 expected
- Revenue: $70.1 billion vs. $68.48 billion expected
- Microsoft Cloud revenue: $42.4 billion vs. $42.22 billion
- Intelligent Cloud revenue: $26.8 billion vs. $25.99 billion
Big Tech companies like Microsoft are racing to lead the AI industry, which UBS said will grow into a $225 billion market by 2027.
In addition to domestic rivals like Google, Microsoft is also competing against Chinese developers. DeepSeek, based in Hangzhou, emerged as a notable contender earlier this year.
During its second-quarter earnings call in January, Microsoft said sales related to Azure and other cloud computing services grew 31% during Q2, which fell slightly below analysts’ expectations.
At the time, CFO Amy Hood told investors that Microsoft was in “a pretty constrained capacity place” regarding its ability to provide enough data centers to meet demand for artificial intelligence.
Earlier this month, BI reported that Microsoft is simplifying how it sells AI, which falls under Copilot. People in the organization told BI that the current system confuses customers, slows down sales, and impacts the cost and quality of the tools.
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