Microsoft shares climbed roughly 9% in after-hours trading on Wednesday following the release of stronger-than-expected quarterly results, fueled largely by growth in its Azure cloud business. The company also issued a bullish revenue forecast, easing investor concerns amid a turbulent macroeconomic backdrop.
For the fiscal third quarter ended March 31, Microsoft reported revenue of $61.86 billion, a 13% year-over-year increase. Net income rose 18% to $25.8 billion, or $2.94 per share, beating analyst expectations.
Looking ahead, Microsoft forecasted revenue between $73.15 billion and $74.25 billion for the current quarter, well above LSEG’s $72.26 billion consensus at the midpoint. The company expects Azure revenue to grow 34% to 35% in constant currency, ahead of StreetAccount’s 31.5% forecast.
The upbeat guidance comes despite rising geopolitical tensions and the potential impact of President Donald Trump’s recently announced tariffs, which arrived in early April. Investors had been concerned about the effect of trade barriers on tech supply chains and spending.
Microsoft CEO Satya Nadella reiterated the company’s aggressive investment strategy in AI infrastructure, noting plans to spend $80 billion in fiscal 2025 on data center construction. These projects are likely to involve significant imports, potentially affected by new tariffs.
Capital expenditures during the quarter, excluding finance leases, soared nearly 53% year-over-year to $16.75 billion, surpassing Visible Alpha’s $16.37 billion estimate. “Demand is growing a bit faster,” said CFO Amy Hood. “Therefore, we now expect to have some AI capacity constraints beyond June.”
Azure revenue jumped 33%, with AI services contributing 16 percentage points of that growth. Analysts had expected between 29.7% and 30.3% growth. Hood noted progress in Microsoft’s joint cloud engagements with partners, saying, “Things were a little better, and we still have some work to do in our scale motions.”
The Intelligent Cloud segment, which includes Azure, brought in $26.75 billion—up 21% year-over-year and ahead of the $26.16 billion consensus. Meanwhile, the Productivity and Business Processes unit, home to Office and LinkedIn, generated $29.94 billion in revenue, a 10% rise and above the $29.57 billion forecast.
LinkedIn’s Talent Solutions business, however, remains challenged. “It continues to be impacted by weakness in the hiring market,” Hood acknowledged.
Highlighting Microsoft’s AI momentum, Nadella said GitHub Copilot now serves over 15 million users—four times more than a year ago.
While the company’s implied operating margin of 43.35% slightly missed expectations, its strong guidance and continued AI-driven growth trajectory helped lift investor sentiment, even as broader market pressures continue to weigh on tech stocks.
