Microsoft Q3 earnings tops Wall Street expectations on strong cloud, AI demand
Investing.com -- Microsoft on Wednesday reported quarterly revenue growth that surpassed analyst expectations, as the company’s substantial investments in artificial intelligence infrastructure yielded returns amid strong demand for cloud services and AI.
The company reported first-quarter revenue of $82.9 billion, well above the consensus estimate of $81.29 billion. However, shares were down over 1% in extended hours of trading.
The company said revenue at its Azure cloud-computing unit increased 40% in the January-March quarter, meeting the consensus estimate of 40% from research firm Visible Alpha.
Microsoft Cloud revenue was $54.5 billion, up 29% (up 25% in constant currency), it said.
The results could alleviate concerns that slow adoption of its Copilot 365 assistant for businesses and dependence on OpenAI might have reduced Microsoft’s position in the AI sector.
“We are focused on delivering cloud and AI infrastructure and solutions that empower every business to eval-max their outcomes in the agentic computing era,” said Satya Nadella, chairman and chief executive officer of Microsoft. “Our AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year.”
Th teechnology giant reported diluted earnings per share of $4.27 in the January-March quarter, $0.22 better than the analyst estimate of $4.05
The performance may also support the company’s data-center spending, which has affected cash flows, as major cloud providers are expected to spend more than $600 billion on AI infrastructure this year.
Microsoft has added Anthropic’s technology to its cloud services and products, such as Copilot, as demand for the Claude creator’s models has increased.
Earlier this week, Microsoft restructured its OpenAI agreement to secure its 20% share of the startup’s revenue through 2030, regardless of technological developments.