Microsoft's AI Fuels Cloud Surge

Microsoft's shares experienced a significant jump, exceeding 6% in after-hours trading, following a robust fiscal third quarter. The surge was propelled by strong demand for its cloud services, particularly Azure, which saw a 33% revenue increase, with 16% of that growth directly linked to AI services. This performance surpassed analysts' expectations, highlighting Microsoft's successful integration of AI into its cloud offerings. Total revenue climbed 13% year-over-year to $70.1 billion, exceeding projections of $68.5 billion, while earnings per share reached $3.46, also surpassing estimates. Microsoft's Intelligent Cloud business, encompassing Azure, reported a 21% revenue rise to $26.75 billion, further solidifying its market position.

Microsoft is strategically investing in AI infrastructure, with capital expenditures reaching $21.4 billion and plans to continue investing $80 billion this fiscal year. CFO Amy Hood anticipates Azure's growth to reach 35% in the next quarter. CEO Satya Nadella emphasised that cloud and AI are essential for businesses to expand output, reduce costs and accelerate growth. Despite some concerns about potential data centre investment slowdowns, Microsoft's commitment to AI and cloud technologies remains strong, positioning the company for continued growth and innovation in these key sectors.