Satya Nadella, CEO of Microsoft, talking on CNBC’s “Squawk Field” outdoors the World Financial Discussion board in Davos, Switzerland, on Jan. 22, 2025.
Gerry Miller | CNBC
Microsoft shares popped 7.6% Thursday after the software program big issued robust steerage and strong cloud progress drove a top- and bottom-line beat within the third quarter.
Shares notched their finest day since November 2022.
Azure revenues topped estimates, rising 33% yr over yr. Microsoft attributed 16 factors of that progress to synthetic intelligence. Analysts polled by StreetAccount and CNBC had anticipated 30.3%.
“Clearly, the macro setting stays a wild card, however with Azure again in ‘beat/elevate’ mode, we imagine that overhang now turns right into a tailwind and highlights not solely the numerous demand for AI companies on Azure, but additionally MSFT’s broad base of infrastructure choices to help the continued migration of enterprise workloads to the cloud,” wrote Evercore ISI’s Kirk Materne.
Throughout its fiscal second-quarter outcomes, Microsoft’s Azure section confirmed lighter-than-expected progress and a deceleration from the earlier quarter. Microsoft mentioned it anticipates 34% to 35% Azure progress at fixed forex within the present interval, versus a 31.5% estimate from StreetAccount.
The corporate reported $70.07 billion in income for the fiscal third quarter ending March 31. That mirrored 13% year-over-year progress from a yr in the past and topped a $68.42 billion estimate from analysts polled by LSEG. Web earnings grew 18% to $25.8 billion from $21.9 billion, or $2.94 per share, a yr in the past.
Microsoft mentioned it expects income to vary between $73.15 billion and $74.25 billion within the present quarter. The center of the vary topped a $72.26 billion consensus estimate from LSEG. The strong forecast helped quell some investor issues that President Donald Trump’s shifting tariff insurance policies are weighing on know-how companies.
Microsoft additionally signaled that it’s persevering with to spend on AI infrastructure because it races in opposition to megacap opponents to satisfy ballooning demand. The corporate reiterated that it expects capital expenditures progress within the new fiscal yr, albeit at a slower charge than the present.
Capex, excluding finance leases, grew 53% to $16.75 billion. Analysts surveyed by Seen Alpha had anticipated $16.37 billion.
“Backside-line, whereas the macro presents uncertainty, Microsoft seems poised to yield on GenAI investments which ought to help share good points and extra sturdy progress forward,” mentioned Morgan Stanley’s Keith Weiss.
— CNBC’s Jordan Novet contributed to this report.
