Microsoft Corporation (NASDAQ: MSFT) delivered stronger-than-expected first-quarter results, sending its shares up more than 8% in pre-market trading today, as robust growth in its cloud business continued to benefit from growing demand for AI services.
Earnings per share came in at $3.46 on revenue of $70.1 billion, topping Wall Street estimates of $3.23 and $68.53 billion, respectively.
Azure, Microsoft’s flagship cloud platform, posted 33% year-over-year growth, beating the Street estimates of 30.3%. AI-related services accounted for 16% of Azure’s growth, underscoring the growing adoption of artificial intelligence across enterprise clients.
Microsoft also reported strong forward-looking metrics, with commercial remaining performance obligation climbing 34% year-over-year to $315 billion, reflecting sustained demand across its enterprise customer base.
Capital expenditures reached $21.4 billion in the third quarter, up 52.9% from a year ago but below expectations of $22.39 billion. The company continues ramping up infrastructure spending to meet growing demand for AI and cloud services.
However, these heavy investments in AI infrastructure are pressuring profitability. Microsoft Cloud’s gross margin fell to 69%, reflecting the impact of scaling its AI capabilities.
The strong results also had a positive ripple effect on the broader tech sector. Nvidia Corp (NASDAQ: NVDA), a leader in AI chips, saw its shares rise 3.76%, while rival Advanced Micro Devices (NASDAQ: AMD) gained 2.49%.
Amazon.com (NASDAQ: AMZN), which competes with Microsoft in the cloud space, stock rises 4.05% ahead of its earnings report.
Alphabet Inc. (NASDAQ: GOOGL), the parent company of Google, saw a modest 1% uptick in pre-market trading.
Analysts maintain a consensus “Buy” rating on Microsoft, with an average price target of $482.96, suggesting a 22% upside from current levels.
As of the latest update, Microsoft Corporation (NASDAQ: MSFT) shares are up 8.23%, trading at $427.80.
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David Kirakosyan is a seasoned financial journalist with nearly a decade of hands-on experience in covering the U.S. stock markets. Since 2016, he has written thousands of equity news articles, detailed market analyses, and investment insights for trusted platforms like Benzinga, Investing.com, and StreetInsider. David holds a Master of Science in Finance and is a Level 2 CFA® candidate, reflecting his deep commitment to financial expertise and ethical standards. His reporting combines real-world market experience with a strong academic foundation, helping readers make informed decisions backed by reliable information. Read Full Bio
