Microsoft (MSFT, Financials) delivered stronger-than-expected quarterly results, driven by accelerating Azure cloud growth and a robust AI tailwind. The stock rose 7% in after-hours trading on the upbeat forecast.
Azure revenue rose 33% year over year in the fiscal third quarter ended March 31, exceeding analyst expectations.
AI contributed 16 percentage points to Azure's growth, up from 13 points in the previous quarter.
Microsoft forecast cloud revenue growth of 34% to 35% in Q4 on a constant currency basis, implying $28.75 billion to $29.05 billion in revenue.
Earnings per share came in at $3.46, above the $3.22 consensus.
Total revenue climbed 13% to $70.1 billion, with the Intelligent Cloud unit contributing $26.8 billion.
Commercial bookings rose 18%, boosted by a new contract with OpenAI. Microsoft declined to disclose details but noted that the real upside in Azure came from non-AI services.
Capital expenditures increased 53% to $21.4 billion, with a shift from long-lived assets like data center buildings to shorter-lived hardware, including CPUs and GPUs.
CFO Amy Hood said the company was able to deliver AI capacity earlier than planned, helping to meet strong demand.
The upbeat results and outlook from Microsoft come amid investor concerns about AI overcapacity and slowing tech spend. By surpassing forecasts and shifting its infrastructure strategy, Microsoft signaled confidence in ongoing AI-driven demand and monetization.
Investors will be watching the pace of capital deployment and Azure's Q4 performance closely as Microsoft continues to scale its AI infrastructure.
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