Azure cloud services lead growth, Microsoft's third-quarter earnings report exceeds expectations

According to Zhitong Finance APP, Microsoft (MSFT.US) announced its fiscal year 2025 third-quarter financial report after the market closed on Wednesday, exceeding market expectations. As a result, the company's stock price rose over 6% in after-hours trading. This quarter's performance once again demonstrated the strong growth momentum of its cloud computing business, Azure, which became the main driver for both revenue and profit exceeding expectations.

According to the financial data released by Microsoft, for the quarter ending March 31, the company achieved revenue of $70.07 billion, surpassing the market expectation of $68.42 billion; earnings per share reached $3.46, also higher than the analyst expectation of $3.22.

Quarterly revenue grew 13% year-over-year, with net profit reaching $25.8 billion, an 18% increase from $21.9 billion in the same period last year, and earnings per share rose from $2.94 to $3.46.

As the core of Microsoft's "Intelligent Cloud" division, the Azure cloud platform achieved a revenue growth of 33% this quarter, with 16 percentage points of growth attributed to AI-related demand. This performance exceeded the expectations of StreetAccount and CNBC, which were 30.3% and 29.7%, respectively. The total revenue of the Intelligent Cloud business reached $26.75 billion, a year-over-year increase of approximately 21%, surpassing the market expectation of $26.16 billion.

Microsoft's investment in artificial intelligence infrastructure continues to increase. This quarter, capital expenditures reached $16.75 billion, nearly a 53% increase from the same period last year, exceeding the Visible Alpha analyst expectation of $16.37 billion. CEO Satya Nadella stated earlier this year that the company plans to invest $80 billion in fiscal year 2025 for data center construction to support AI workloads.

In addition to the cloud business, Microsoft's productivity and business processes division (including Office subscriptions and LinkedIn) saw revenue grow 10% year-over-year to $29.94 billion, also above the expected $29.57 billion.

The more personal computing segment (covering Windows, search advertising, hardware, and gaming consoles) saw revenue grow 6% year-over-year to $13.37 billion, also exceeding the market expectation of $12.66 billion. Microsoft noted that licensing revenue from Windows device manufacturers grew by 3% this quarter. Market research firm Gartner estimated that global PC shipments grew by 4.8% during this quarter.

In this fiscal quarter, Microsoft also adjusted its collaboration with its AI strategic partner OpenAI. The company announced that when OpenAI needs additional computing resources, Microsoft will have the priority to purchase, but is not obligated to fulfill delivery. Notably, on the same day, OpenAI, in collaboration with Oracle (ORCL.US) and SoftBank, announced an AI infrastructure project called "Stargate" at the White House However, Microsoft also disclosed that it recognized a loss of $623 million under "other expenses" this quarter, partly due to accounting losses from equity method investments such as OpenAI. In comparison, the loss in the previous quarter reached as high as $2.29 billion.

As of Wednesday's close, Microsoft's stock price has fallen 7% year-to-date, slightly higher than the approximately 6% decline of the S&P 500 index during the same period