Microsoft beats Q3 earnings estimates on high and backside line on sturdy cloud bookings

Microsoft (MSFT) introduced its third quarter earnings after the bell on Wednesday, beating expectations on the highest and backside strains on the energy of its cloud efficiency.

Shares of Microsoft rose greater than 6% on the information.

“We delivered a powerful quarter with Microsoft Cloud income of $42.4 billion, up 20% (up 22% in fixed forex) year-over-year pushed by continued demand for our differentiated choices,” Microsoft government vice chairman and CFO Amy Hood stated in a launch.

For the third quarter, Microsoft noticed earnings per share (EPS) of $3.46 on income of $70 billion. Wall Road was anticipating EPS of $3.21 on income of $68.4 billion, in response to Bloomberg consensus estimates. The corporate reported EPS of $2.94 on income of $61.8 billion in the identical quarter final yr.

Microsoft’s industrial cloud income topped out at $42.4 billion versus an anticipated $42.2 billion, up from $35.1 billion in Q3 2024.

The corporate’s Productiveness and Enterprise Processes section noticed income of $29.9 billion in comparison with expectations of $29.6 billion, whereas Clever Cloud and Azure income hit $26.8 billion.

AI contributed 16 factors of development to Azure income. Analysts have been anticipating 15.6 factors. Microsoft attributed the soar in AI contribution to bringing extra servers on-line to fulfill demand. The corporate has particularly referred to as out capability constraints as a headwind for AI development throughout its previous few quarters.

Microsoft’s Extra Private Computing section, which incorporates gross sales of Home windows licenses to third-party pc makers and its gaming and search divisions, introduced in $13.4 billion. Wall Road was in search of $12.6 billion.

Learn extra: The most recent information and updates on Trump’s tariffs

Microsoft stated that its OEM and units income rose 3% year-over-year, even if stock ranges stay excessive, as machine producers take care of ongoing tariff uncertainty.

Microsoft’s report comes amid fears that President Trump’s tariffs might trigger an financial slowdown that will hit enterprise cloud and AI spending.

The corporate can also be slicing again on a few of its AI buildout, with Noelle Walsh, president of Microsoft Cloud Operations and Innovation, writing in a LinkedIn put up that the corporate is “slowing or pausing some early-stage tasks.”

In February, TD Cowen analyst Michael Elias wrote in an investor word that Microsoft was canceling an unspecified variety of its knowledge middle leases. On the similar time, the tech big has stated it is contending with AI capability constraints which might be stopping it from offering as many AI providers as its clients want.