Highlights:
- Microsoft’s Azure cloud revenue jumped 33%, with AI responsible for 16 percentage points of the growth.
- The company posted $70.1 billion in total revenue, beating analyst expectations and raising its stock by 7% after hours.
- Microsoft’s net profit climbed to $25.8 billion, reflecting an 18% increase year-over-year.
- Capital expenditure is shifting towards shorter-lived assets like chips to fuel AI and cloud innovation.
- Microsoft’s cloud guidance for Q4 remains optimistic, forecasting up to 35% growth.
- The results helped ease investor concerns over AI slowdown and trade tariff impacts.
- Technical analysts now expect possible further gains in Microsoft’s stock, with $442 and $468 seen as resistance levels.
- A new Azure deal with OpenAI contributed to commercial bookings growth, although details remain undisclosed.
Microsoft Corporation delivered better-than-expected earnings for its fiscal third quarter, driven by a surge in its cloud business and growing contributions from artificial intelligence.
The software giant reported $70.1 billion in revenue—a 13% increase over the previous year—and net profit rose 18% to $25.8 billion, further boosting investor confidence in an otherwise uncertain tech market.
Cloud and AI Steer Strong Performance
Microsoft’s Azure cloud platform saw revenue jump by 33%, with 16 percentage points attributed to AI, up from 13 in the previous quarter. This performance exceeded Wall Street estimates and led to a 7% spike in Microsoft’s stock during after-hours trading.
The company’s Intelligent Cloud division, which houses Azure, continues to benefit from businesses seeking scalable solutions to enhance productivity and reduce costs.
On a conference call with investors, CFO Amy Hood clarified that most of Azure’s strong showing stemmed from non-AI services, though the AI side “was able to deliver supply early to a number of customers.” CEO Satya Nadella reaffirmed the company’s commitment to “innovating across the entire AI stack.”
The company also forecast Q4 cloud revenue between $28.75 billion and $29.05 billion, suggesting continued momentum. A recent Azure contract with ChatGPT developer OpenAI contributed to an 18% growth in commercial bookings, though Microsoft withheld the deal’s specifics.
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Navigating Market Pressures and Technical Outlook
Despite broader concerns over U.S. tariffs and a perceived AI spending cooldown—exacerbated by canceled Microsoft data-center leases—analysts believe the strong earnings dispel immediate fears. The results follow a similar trend seen at Google, indicating resilience among major tech players.
From a technical standpoint, Microsoft’s stock appears poised for further gains. A recent falling wedge pattern retest has investors watching key resistance levels at $442 and $468. Meanwhile, support zones at $395 and $359 are crucial for potential pullbacks.
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Strategic Shifts and Capital Spending
Microsoft continues to invest heavily in infrastructure, targeting nearly $80 billion in capital and infrastructure spending this fiscal year. However, leadership noted a tactical pivot toward shorter-lived assets like chips—designed to support fast-evolving AI applications.
While Microsoft has maintained a quieter public profile on political contributions compared to rivals, it has remained firmly focused on performance, marking its 50th anniversary with solid financial footing.
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