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(Reuters) -Microsoft Corp beat Wall Street’s estimates for third-quarter revenue and profit on Tuesday, driven by growth in its cloud computing and Office productivity software businesses.
Shares gained 4.6% in after-market trading following a report by Redmond, Washington-based Microsoft (NASDAQ:MSFT) that profits were $2.45 per share, beating Wall Street estimates of $2.23, according to data from Refinitiv and up 10% from the same quarter last year.
Revenue rose 7% to $52.9 billion in the quarter ended March, inching past the average analyst estimate of $51.02 billion, according to Refinitiv. The bulk of Microsoft sales still come from selling software and cloud computing services to customers, even though the company has grabbed headlines this year with its partnership with ChatGPT creator OpenAI and sprucing up the Bing search engine with artificial intelligence technology.
“It’s really early and so the excitement is very high and the innovation is definitely happening,” Brett Iversen, Microsoft’s head of investor relations, told Reuters. However he said AI is still a relatively small part of Microsoft’s total business.
Microsoft said growth at its cloud business Azure was 27% in the latest reported quarter beating analyst expectations for 26.6% growth, according to the consensus from 23 analysts polled by Visible Alpha.
That was despite a continued challenging overall macroeconomic environment, said Iversen. “Overall I would say environment felt similar to Q2,” he said.
Analysts had expected a gloomy economic outlook to hit Microsoft’s Windows business, which depends heavily on PC sales that have sagged in recent quarters. The sales drop in the segment was less severe than analysts expected, with Microsoft reporting revenue of $13.3 billion versus analyst estimates of $12.19 billion, according to Refinitiv data.
The company’s productivity segment, which includes its Office software and advertising sales for the LinkedIn social networking site, also beat analyst expectations with revenue of $17.5 billion versus estimates of $16.99 billion, according to Refinitiv.
Overall revenue for the company’s cloud unit, which includes Azure as well as other services, was $22.1 billion, slightly above estimates of $21.85 billion, according to Refinitiv data.
Alphabet (NASDAQ:GOOGL) Inc which also has a large cloud business, reported strong results Tuesday, lifting its shares 3% after the bell. Those results and Microsoft’s helped boost shares of Amazon.com Inc (NASDAQ:AMZN), another major cloud operator, 2.4% in after hours trading.
