Microsoft exceeded expectations for third-quarter revenue and profit due to the rising adoption of artificial intelligence (AI) across its cloud services. Microsoft’s revenues rose 17 percent to $61.9 billion in the quarter ending March, exceeding the estimate of $60.80 billion, according to London Stock Exchange Group (LSEG) data. Moreover, earnings per share of $2.94 exceeded Wall Street’s target of $2.82. Microsoft’s fiscal year runs from July to June.
Meanwhile, Microsoft’s AI-driven capital expenditures in the third quarter reached nearly $1 billion, exceeding analysts’ estimates. Microsoft’s capital expenditures increased to $14 billion from $11.5 billion in the last quarter, according to Visible Alpha.
The 4 percent rise in Microsoft shares after the bell raised the company’s stock market value by $128 billion as profit and revenue growth overshadowed its higher-than-expected capital expenditures.
AI investments drive growth
Microsoft’s substantial investments in AI-driven initiatives have yielded significant returns, with revenue from its Intelligent Cloud unit, which includes the Azure cloud computing platform, reaching $26.7 billion. Azure, in particular, experienced a remarkable 31 percent revenue growth, surpassing market expectations. The company’s strategic partnership with OpenAI has enabled it to develop innovative AI tools, such as the Copilot tool, which have enhanced its enterprise software and Windows businesses.
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Other units see surging growth
Microsoft’s success extends beyond its cloud services, with revenue from its More Personal Computing unit increasing by 17 percent to $15.6 billion. Similarly, the Productivity and Business Processes unit, which includes office software and LinkedIn, saw a revenue increase of 12 percent to $19.6 billion, also surpassing analyst estimates.
