Microsoft’s fiscal third-quarter earnings surpassed Wall Street expectations, propelled by a 33% year-over-year surge in Azure cloud revenue and robust enterprise demand for AI-driven services. The company’s stock climbed over 7% in after-hours trading, reflecting investor confidence in its cloud and AI strategy.
Total revenue for the quarter reached $70.1 billion, marking a 13% increase from the same period last year. Net income rose to $25.8 billion, or $3.46 per share, up from $21.9 billion, or $2.94 per share, a year earlier. The Intelligent Cloud segment, which includes Azure, generated $26.8 billion in revenue, a 21% increase, with Azure alone contributing significantly to this growth.
Commercial bookings, indicative of new infrastructure and software contracts, grew by 18%, bolstered by a substantial Azure commitment from OpenAI. Microsoft’s commercial remaining performance obligation—a measure of future revenue—expanded to $315 billion, up 34% year-over-year, with approximately 40% expected to be recognized within the next 12 months.
Microsoft Cloud revenue totaled $42.4 billion, a 20% increase, driven by continued demand for AI-integrated services. CEO Satya Nadella emphasized the role of AI and cloud technologies in enhancing business productivity and efficiency.
Despite the strong performance, the company acknowledged that scaling AI infrastructure impacted gross margins, which decreased to 69% for Microsoft Cloud. Capital expenditures reached $21.4 billion during the quarter, reflecting investments in long-term AI and cloud infrastructure.
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