Microsoft Shares Soar 9% After Earnings and Revenue Beat, Boosted by Uplifting Forecast

Key Highlights:

• Microsoft exceeded expectations with stronger-than-anticipated results on both revenue and earnings.

• The company’s Azure cloud division outperformed analyst forecasts.

• Investors will be closely watching the upcoming earnings call for insights into how President Trump’s tariffs are affecting Microsoft’s business.

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  Microsoft Shares Surge 9% After Strong Quarterly Results, Azure Cloud Leads the Way

  Microsoft’s shares jumped nearly 9% in after-hours trading on Wednesday, following the company’s impressive quarterly earnings report. With strong performance across the board, particularly from its Azure cloud business, Microsoft also issued an unexpectedly optimistic forecast, which helped reassure investors amid market uncertainties.

  Here’s a breakdown of Microsoft’s performance compared to expectations:

  • Earnings per share: $3.46 vs. $3.22 expected

  • Revenue: $70.07 billion vs. $68.42 billion expected

  Looking ahead, Microsoft projected revenue between $73.15 billion and $74.25 billion for the upcoming quarter. The midpoint of that range exceeded analysts’ expectations, which had pegged the number at $72.26 billion. Microsoft also sees its Azure business growing by 34% to 35% in constant currency, far surpassing the Street’s consensus of 31.5%.

  On the expense side, Microsoft signaled that capital expenditures would rise in the new fiscal year, though at a slower pace compared to fiscal 2025. Operating margins were just under analyst estimates at 43.35%, compared to the expected 43.5%.

  Microsoft’s revenue for the fiscal third quarter, which ended March 31, grew 13% year-over-year, with net income climbing 18% to $25.8 billion, or $2.94 per share.

  While these numbers reflect past performance, investors are especially interested in what’s to come. With President Trump’s tariffs announced in April, Microsoft’s strong guidance provided some much-needed reassurance. As one of the tech giants most dependent on overseas imports for its data center expansion, Microsoft’s forecast was a relief for investors worried about rising costs.

  CEO Satya Nadella reiterated that Microsoft plans to invest $80 billion in fiscal 2025 to build data centers capable of supporting artificial intelligence workloads. These investments come with hefty import costs, potentially impacted by tariffs, but the company’s overall outlook remains positive.

  During the quarter, Microsoft continued its focus on AI infrastructure, with capital expenditures reaching $16.75 billion—up nearly 53% from the previous year. Analysts had expected $16.37 billion. Azure revenue grew 33%, with AI contributing significantly to this surge, outperforming growth estimates of 30.3% from StreetAccount and 29.7% from CNBC.

  In January, Microsoft had flagged some challenges with non-AI Azure cloud execution. However, CFO Amy Hood expressed optimism, noting that improvements had been made and that while there’s still work to do, the progress was encouraging.

  The company’s Intelligent Cloud unit, which includes Azure, generated $26.75 billion in revenue, up around 21%, surpassing analysts’ expectations. In AI, Microsoft continues to expand rapidly, with more than 15 million users now leveraging its GitHub Copilot assistant, quadrupling last year’s numbers.

  Additionally, Microsoft’s Productivity and Business Processes segment, which includes Office software subscriptions and LinkedIn, saw revenue rise 10% to $29.94 billion, outpacing StreetAccount’s estimate of $29.57 billion. However, LinkedIn’s Talent Solutions remains impacted by a sluggish hiring market, according to Hood.

  In all, Microsoft’s solid results, combined with strong guidance and robust investments in AI, have put the company in a strong position moving forward—even as it faces challenges like tariffs. The tech giant’s continued commitment to innovation and growth remains clear as it continues to evolve in the cloud and AI spaces.

  Microsoft Products and Services Growth (YoY Percent Change | Q1 2024–Q3 2025)

  The following table displays the year-over-year growth in various Microsoft business segments from Q1 2024 through Q3 2025.

  Business Segment	Q1 FY 2024	Q2 FY 2024	Q3 FY 2024	Q4 FY 2024	Q1 FY 2025	Q2 FY 2025	Q3 FY 2025
  Azure + Other Cloud Services	31%	33%	35%	34%	33%	31%	33%
  Dynamics Products + Cloud Services	22%	21%	19%	16%	14%	15%	11%
  Microsoft 365 Commercial Cloud	20%	20%	17%	15%	15%	16%	12%
  Microsoft 365 Consumer Products + Cloud Services	3%	5%	4%	3%	5%	8%	10%
  Search + News Advertising	8%	6%	8%	15%	18%	21%	21%
  Windows OEM + Devices	−5%	4%	2%	−1%	2%	4%	3%
  Xbox Content + Services	13%	61%	62%	61%	61%	2%	8%

  Microsoft’s More Personal Computing Unit Sees 6% Revenue Growth Amid Device and Windows Sales Boost

  Microsoft’s More Personal Computing division, which includes Windows, search advertising, devices, and video game consoles, reported a solid 6% revenue growth, reaching $13.37 billion—surpassing StreetAccount’s estimate of $12.66 billion.

  The company noted a 3% increase in Windows operating license sales to device manufacturers and strong performance in device sales. However, inventory levels remained higher than usual, likely due to lingering uncertainties around tariffs. According to Gartner, PC shipments rose by 4.8% during the quarter, signaling continued demand.

  CEO Satya Nadella highlighted a notable shift in commercial traction, particularly as Windows 10 approaches its end-of-life support in October. The transition to Windows 11 is already underway, with deployments among commercial clients growing by around 75%.

  Additionally, during the quarter ending March 31, Microsoft made a significant move regarding its partnership with AI pioneer OpenAI. The company announced that it would now have the right of first refusal when OpenAI seeks additional computing capacity. However, Microsoft won’t always be the sole provider. On the same day, OpenAI revealed the launch of its Stargate AI infrastructure project, in collaboration with Oracle and SoftBank, at the White House.

  Microsoft said it had $623 million in “other expense” during the quarter. The sum includes recognized losses on equity method investments, including OpenAI. The figure was $2.29 billion in the prior quarter.

  As of Wednesday’s close, Microsoft shares were down 7% for the year, while the S&P 500 index was down about 6%.