Microsoft (NASDAQ:MSFT) surpassed analysts’ projections for its fiscal third-quarter earnings, primarily driven by the robust performance of its cloud computing division.
“Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry,” remarked Microsoft CEO Satya Nadella.
The tech giant reported that its AI services contributed 7 percentage points of growth to its Azure and other cloud services revenue, a notable increase from previous quarters. This growth trend underscores Microsoft’s commitment to advancing AI capabilities within its cloud offerings.
Following the earnings announcement, Microsoft’s stock surged by 5%.
Microsoft delivered earnings per share (EPS) of $2.94 on revenue totaling $61.9 billion, outpacing Wall Street estimates of $2.83 EPS on $60.88 billion revenue.
The company’s commercial cloud revenue reached $35.1 billion, exceeding Wall Street estimates of $33.93 billion. Segment-wise, Productivity and Business Processes revenue stood at $19.57 billion, surpassing expectations, while Intelligent Cloud and More Personal Computing revenue reached $26.71 billion and $15.58 billion, respectively, both exceeding analysts’ forecasts.
The impressive revenue performance in More Personal Computing was fueled by notable growth in Windows OEM sales and Xbox content and services sales, particularly bolstered by Microsoft’s acquisition of Activision Blizzard.
Despite Microsoft’s stock rising by more than 10% year-to-date, it trails behind competitors like Google parent Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN), which have seen increases of 15% and 22%, respectively, in the same period. Over the past 12 months, Microsoft’s shares have climbed by 32%, with Amazon and Google posting even higher gains.
In the fierce competition to provide comprehensive AI solutions to enterprise and consumer markets, Microsoft recently secured a significant win with Coca-Cola (NYSE:KO), signing a five-year, $1.1 billion agreement to utilize Microsoft Azure cloud services and AI technology.
Microsoft continues to expand its AI capabilities across its product ecosystem, with notable hires and partnerships further solidifying its position as a leader in AI innovation. These initiatives underscore Microsoft’s commitment to driving AI transformation across industries and platforms.
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