Microsoft Corporation develops and supports software, services, devices and solutions worldwide. The Productivity and Business Processes segment offers office, exchange, SharePoint, Microsoft Teams, office 365 Security and Compliance, Microsoft viva, and Microsoft 365 copilot; and office consumer services, such as Microsoft 365 consumer subscriptions, Office licensed on-premises, and other office services.
Microsoft has once again proven why it’s one of the most resilient and innovative tech giants in the world, delivering a strong set of third-quarter results that exceeded market expectations across the board.
Revenue came in at USD 70.1 billion, well ahead of the forecast USD 68.5 billion. This represents a 13% increase from the same period last year, with earnings per share at USD 3.46, comfortably beating the USD 3.21 estimate. Investors responded positively, with Microsoft shares rising around 6% in after-hours trading.
At the heart of this result was the continued strength in Microsoft’s cloud business. Azure and other cloud services grew by 35% in constant currency, surpassing forecasts, with artificial intelligence contributing significantly to that momentum. In fact, 16 percentage points of Azure’s growth were attributed to AI usage—an increase from the prior quarter, reflecting the growing adoption of AI-powered solutions across industries.
The company’s partnership with OpenAI is clearly paying off. Microsoft isn’t just hosting AI infrastructure; it’s integrating AI into its own products, such as Word, Excel and Teams, through the Copilot feature, driving more revenue per user. These upgrades have begun converting more customers to premium tiers.
Capital expenditure for the quarter, which includes investments in data centres powering these AI tools, came in at USD 21.4 billion. That’s slightly below the prior quarter, marking the first sequential decline in over two years. While some investors may worry this signals a slowdown, Microsoft remains ahead of the pack in terms of AI infrastructure and sales, with estimated annualised AI revenue from Azure already reaching USD 16 billion.
Other segments also performed well. The Productivity and Business Processes unit, which includes Office and LinkedIn, delivered USD 29.9 billion in revenue, up 10%. Even the More Personal Computing division, home to Windows, Xbox and Surface products, beat expectations with USD 13.4 billion, suggesting steady consumer demand despite broader economic headwinds.
Recent concerns about tariffs and US government policy changes have rattled markets, but Microsoft appears better shielded than most. As a software-focused business, it’s less exposed to direct import tariffs compared to companies reliant on physical goods. However, tariffs can still affect its customers, raising costs across the economy, which may cause some businesses to delay or scale back spending on IT and cloud services.
That said, Microsoft’s strong recurring revenue base and mission-critical products provide a buffer. Businesses are more likely to cut back on non-essential tools before touching the platforms they rely on daily to operate and communicate. For now, Microsoft’s results show that demand remains firm, even as the macro picture gets more uncertain.
With AI-related tailwinds, strong customer demand, and efficient cost management, Microsoft remains well placed to deliver double-digit growth in the year ahead.
