- Microsoft’s (MSFT) stock rose over 6% to $419.38 in after-hours trading after the software giant reported Q3 earnings of $3.46 per share, beating the $3.22 consensus by $0.24, with revenues up 13.3% to $70.07 billion, surpassing the $68.4 billion forecast.
- Azure and other cloud services revenue grew 33% (35% in constant currency), exceeding prior guidance of 31-32%, while segment revenues included Productivity and Business Processes at $29.4 billion (up 10%), Intelligent Cloud at $26.8 billion (up 21%), and More Personal Computing at $13.4 billion (up 6%).
- Key growth drivers included Microsoft 365 Commercial cloud revenue up 12% (15% in constant currency), Dynamics 365 revenue up 16% (18% in constant currency), Xbox content and services up 8% (9% in constant currency), and search advertising revenue up 21% (23% in constant currency).
Microsoft’s (MSFT) stock climbed over 6% to $419.38 in after-hours trading on Wednesday, buoyed by third-quarter earnings that surpassed Wall Street expectations, with earnings per share of $3.46 exceeding the consensus of $3.22 by $0.24 and revenues rising 13.3% year-over-year to $70.07 billion, topping the $68.4 billion forecast. The company’s cloud services, particularly Azure, demonstrated robust demand, with Azure and other cloud services revenue growing 33% (35% in constant currency), outpacing prior guidance of 31-32%, despite economic headwinds from new tariffs and market turbulence. Across its segments, Microsoft reported strong performance: the Productivity and Business Processes segment grew 10% (13% in constant currency) to $29.4 billion, aligning with guidance of $29.4 billion to $29.7 billion, while the Intelligent Cloud segment surged 21% (22% in constant currency) to $26.8 billion, exceeding expectations of $25.9 billion to $26.2 billion, and the More Personal Computing segment rose 6% (7% in constant currency) to $13.4 billion, surpassing guidance of $12.4 billion to $12.8 billion.
The resilience of Microsoft’s cloud offerings, particularly Azure’s 35% constant-currency growth, underscores the sustained enterprise demand for digital transformation and AI-driven solutions, even as global trade policies introduce uncertainty. Within the Productivity and Business Processes segment, Microsoft 365 Commercial products and cloud services revenue increased 11% (14% in constant currency), with its commercial cloud revenue up 12% (15% in constant currency), while Microsoft 365 Consumer products and cloud services grew 10% (12% in constant currency). LinkedIn revenue rose 7% (8% in constant currency), and Dynamics products and cloud services saw an 11% increase (13% in constant currency), driven by a 16% (18% in constant currency) surge in Dynamics 365 revenue. The Intelligent Cloud segment’s strength was fueled by a 22% (24% in constant currency) rise in server products and cloud services, with Azure’s performance reflecting Microsoft’s strategic investments in AI and machine learning infrastructure.
In the More Personal Computing segment, Xbox content and services revenue grew 8% (9% in constant currency), search and news advertising revenue, excluding traffic acquisition costs, jumped 21% (23% in constant currency), and Windows OEM and Devices revenue edged up 3%. These results highlight Microsoft’s diversified revenue streams, which have cushioned it against macroeconomic challenges, including tariff-related cost pressures. The company’s ability to exceed guidance across all segments reflects its operational discipline and market leadership in cloud computing, a sector increasingly critical as businesses prioritize scalability and efficiency. As tariffs and economic volatility persist, Microsoft’s strong quarterly performance signals confidence in its long-term growth, driven by its cloud and AI capabilities, positioning it to navigate an uncertain global landscape while capitalizing on enterprise demand for advanced technology solutions.
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