Microsoft reported a robust performance in its third fiscal quarter, exceeding Wall Street expectations with a revenue surge to USD 61.9 billion, a 17 per cent increase from the previous year.
The growth was significantly ushered by the adoption of artificial intelligence (AI) technologies across its various platforms, particularly in its cloud services. The company's earnings per share reached USD 2.94, surpassing the estimated USD 2.82.
A key highlight from the earnings report was the exceptional performance of Microsoft's Intelligent Cloud unit, which houses the Azure cloud computing platform. This segment alone generated USD 26.7 billion in revenue, again topping expectations which were set at USD 26.24 billion according to LSEG data.
Azure's growth was particularly notable, with a 31 per cent increase, outperforming the anticipated 29 per cent growth forecast by Visible Alpha. Looking ahead, Microsoft has forecasted its Azure growth to remain strong, estimating a growth range of 30 per cent-31 per cent for the fiscal fourth quarter, which is expected to outpace the Wall Street projection of 28.5 per cent.
The surge in Microsoft's financial metrics is largely credited to the integration of generative AI tools and strategic partnerships, notably with OpenAI. This collaboration has not only enhanced existing products like Azure, Bing, and Microsoft 365 but has also introduced new AI-driven tools such as the Copilot suite, launched at a subscription fee of USD 30 a month, bolstering the company’s enterprise software and Windows businesses.
Further, the More Personal Computing unit saw a 17 per cent increase in revenue to USD 15.6 billion, surpassing the USD 15.08 billion forecast by analysts. The Productivity and Business Processes unit also reported a commendable performance with a 12 per cent rise in revenue to USD 19.6 billion, slightly above the estimated USD 19.54 billion.
The strong financial outcome and promising projections for the coming quarter have significantly enhanced investor confidence, reflected in a more than 4 per cent jump in Microsoft’s shares in extended trading. This surge increased Microsoft's market value by USD 128 billion, a stark contrast to Facebook and Instagram parent Meta, which saw a USD 200 billion decrease in market value after reporting potential rising AI expenses and a lower-than-anticipated revenue forecast.
(Inputs from Reuters)
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