TLDR
- Microsoft reported Q3 earnings of $3.46 per share on revenue of $70.1 billion, exceeding analyst expectations
- Azure cloud growth accelerated to 33%, with AI workloads contributing 16 percentage points
- Microsoft stock rose 8.4% in premarket trading following the earnings announcement
- The company expects Azure revenue growth to increase to 34% in Q4
- Capital expenditures reached $16.7 billion this quarter as Microsoft continues AI investments
Microsoft’s stock jumped after the tech giant posted better-than-expected third-quarter results on April 30, 2025. The company reported adjusted earnings of $3.46 per share, easily beating analyst forecasts of $3.22.
Revenue for the quarter reached $70.1 billion, surpassing the $68.4 billion Wall Street had expected. This represents a 13% increase from the $61.9 billion reported in the same period last year.
Microsoft’s cloud business continues to be the star performer. Overall cloud revenue rose 20% year over year to $42.4 billion.
The closely watched Azure public-cloud business saw growth accelerate to 33%, up from 31% in the previous quarter. Analysts had expected Azure growth of around 29%.
AI is playing an increasingly important role in Microsoft’s cloud growth. The company noted that AI workloads contributed 16 percentage points to Azure’s growth, up from 13 percentage points last quarter.
Microsoft’s AI-Driven Momentum
CEO Satya Nadella emphasized the importance of cloud and AI technologies during the earnings call. “Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth,” he stated.
Microsoft’s early investment in OpenAI is paying dividends. The company has successfully integrated AI tools across its product lineup, including its Office 365 suite and Copilot assistants.
According to Nadella, more than 15 million people are now using GitHub Copilot assistant, quadrupling the figure from a year ago.
The company’s stock responded positively to the earnings news and guidance. Microsoft shares moved even higher following its earnings call, rising 8.4% to $428.50 in premarket trading on Thursday.
If these gains hold, Microsoft’s stock would recover all losses for the year.
Future Outlook Remains Strong
Looking ahead, Microsoft provided encouraging guidance. CFO Amy Hood stated that the company expects fourth-quarter Azure revenue growth to be about 34%, signaling further acceleration.
Despite massive investments in AI, Hood reassured investors that Microsoft continues to expect full-year operating margins to increase slightly year-over-year.
Capital expenditures in the quarter totaled $16.7 billion, slightly higher than Wall Street estimates of $16.2 billion and up from $11 billion in the same period one year ago.
Microsoft’s quarterly capital expenditure, including finance leases, amounted to $21.4 billion, marking a sequential decline for the first time in two years.
Earlier in April, Microsoft scaled back some of its global data center projects, demonstrating flexibility in its infrastructure strategy as AI demand continues to grow.
Melius Research analyst Ben Reitzes remains bullish on Microsoft. “We expect Microsoft to continue to benefit since confidence in Azure has been restored and you can’t tariff software,” he wrote in a research note.
The solid results from Microsoft, along with similar performances from other software companies like SAP and ServiceNow, suggest businesses haven’t pulled back on software spending despite economic uncertainties.
Kendra Goodenough, Microsoft’s senior director of investor relations, told Barron’s: “The services we offer customers broadly across the cloud and AI capabilities are helping them grow their businesses, drive efficiencies, increase productivity.”
Microsoft’s strong performance comes despite potential headwinds from Trump’s sweeping tariffs introduced in April, though most were reduced to 10% for countries other than China.
The impact of these tariffs may still have a lagging effect on Microsoft’s operations, but the company’s current momentum in cloud and AI appears more than sufficient to overcome these challenges.
