Shares of Microsoft edged higher Wednesday evening after the tech giant reported better-than-expected results across all key metrics and signaled that growth in its all-important Azure cloud computing business continues to accelerate. Revenue in the three months ended in September rose about 19% year over year to $92.28 billion, beating the LSEG consensus estimate of $90.69 billion. Adjusted earnings per share (EPS) totaled $4.92, up 32% from a year earlier, beating the $4.73 consensus, according to LSEG. Azure cloud revenue grew 48% year over year on a reported and constant-currency basis, beating FactSet consensus estimates of about 44% and 45%, respectively. MSFT 1Y mountain Microsoft 1-year stock performance Bottom line Earlier this year, Microsoft shares were down about 25%, trading in the mid-$300s on concerns that it had fallen behind in the AI race, that its seat-based subscription model was vulnerable to disruption, and that the company lacked innovation in its AI tools. But that all changed in July: Azure revenue growth accelerated; momentum in Copilot paid seats grew; and, perhaps most importantly, the company separated itself from the other…
Microsoft’s strong quarter backs up its stock rebound. Here's our new price target
In short
The Redmond-based technology giant beat analyst expectations for its September quarter, driven by a 48% surge in Azure cloud computing revenue. Operational progress was bolstered by the addition of 24 data centers across five continents and increased GPU efficiency, which helped mitigate third-party capacity constraints. Meanwhile, quarterly capital expenditures reached $45.2 billion, representing a significant year-over-year increase but remaining well below the $51 billion anticipated by analysts.
Key points
- Microsoft's stock entered record-high territory following after-hours gains driven by bro…: Microsoft's stock entered record-high territory following after-hours gains driven by broad financial beats across key metrics.
- Enterprise engagement with the Copilot artificial intelligence tool expanded rapidly, wit…: Enterprise engagement with the Copilot artificial intelligence tool expanded rapidly, with daily users increasing 50% year over year.
- Capital spending of $45.2 billion came in well below management projections of $50 billio…: Capital spending of $45.2 billion came in well below management projections of $50 billion despite ongoing infrastructure expansions.