Microsoft (NASDAQ: MSFT) reported $82.9 billion in fiscal third-quarter revenue, beating Wall Street’s estimate as Azure growth reached 40% and the company’s AI business kept scaling fast.
The stock still fell 3% on Wednesday, because investors did not treat the beat like a clean victory. The numbers were stronger than expected, but the market is still watching the cost of AI like a hawk.
The company posted adjusted earnings per share of $4.27, above the $4.06 expected by analysts tracked by LSEG. Revenue also topped the $81.39 billion forecast. Sales rose 18% from last year, or 15% in constant currency. Operating income hit $38.4 billion, up 20%, or 16% without currency swings.
Microsoft grows cloud revenue while Azure keeps pulling AI demand into the numbers
Net income came in at $31.8 billion, up 23% under GAAP. On a non-GAAP basis, profit rose 20%, or 18% in constant currency. Diluted earnings per share also stood at $4.27, up 23% under GAAP and 21% on a non-GAAP basis, or 18% in constant currency.
The non-GAAP figures stripped out the effect of OpenAI investments. For the three months ended March 31, Microsoft reported GAAP net income of $31.778 billion, with a $14 million adjustment, taking adjusted net income to $31.792 billion.
In the same quarter last year, GAAP net income was $25.824 billion, with a $583 million adjustment, bringing adjusted net income to $26.407 billion.
Diluted EPS was $4.27 on both a GAAP and adjusted basis this quarter, because the OpenAI-related adjustment had no per-share effect.
Last year, GAAP diluted EPS was $3.46, while adjusted EPS was $3.54 after an $0.08 adjustment. All growth rates were measured against the same quarter in the prior fiscal year.
Satya Nadella, chairman and chief executive officer of Microsoft, said, “We are focused on delivering cloud and AI infrastructure and solutions that empower every business to eval-max their outcomes in the agentic computing era.” He added, “Our AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year.”
Amy Hood, executive vice president and chief financial officer, said, “We delivered results that exceeded expectations across revenue, operating income, and earnings per share, reflecting strong execution and growing demand for the Microsoft Cloud.”
Microsoft Cloud revenue reached $54.5 billion, up 29%, or 25% in constant currency. Commercial remaining performance obligation rose 99% to $627 billion, giving investors a fat backlog number to chew on.
Microsoft reports mixed segment results as Windows, Xbox, and stock pressure drag attention
Productivity and Business Processes revenue was $35.0 billion, up 17%, or 13% in constant currency. Inside that unit, Microsoft 365 Commercial cloud revenue grew 19%, or 15% in constant currency.
Microsoft 365 Consumer cloud revenue jumped 33%, or 29% without currency effects. LinkedIn revenue rose 12%, or 9% in constant currency. Dynamics 365 revenue increased 22%, or 17% on the same basis.
Intelligent Cloud revenue reached $34.7 billion, up 30%, or 28% in constant currency. The key line was Azure and other cloud services, which climbed 40%, or 39% without currency swings. That is the part investors keep tying to AI demand, data centers, and the massive infrastructure race.
More Personal Computing revenue was $13.2 billion, down 1%, or 3% in constant currency. Windows OEM and Devices revenue fell 2%, or 3% without currency effects. Xbox content and services revenue dropped 5%, or 7% in constant currency. Search advertising revenue, excluding traffic acquisition costs, rose 12%, or 9% on a constant-currency basis.
Microsoft returned $10.2 billion to shareholders through dividends and stock buybacks during the quarter. By Wednesday’s close, Microsoft stock was down 12% for 2026 after its worst quarterly showing since 2008. The pressure came from wider fear that AI could damage software demand, plus concern that the company’s heavy AI spending may not deliver enough return.
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Source: https://www.cryptopolitan.com/microsoft-beats-earnings-with-82-9-billion/
