Microsoft Corp.’s quarterly revenue and profit beat Wall Street’s estimates on Tuesday. This was due to growth in its cloud computing and Office productivity software businesses, and the company said that sales were being boosted by products that use artificial intelligence.
The company said that its main business segments would meet or beat Wall Street’s expectations for sales in the current quarter.
According to data from Refinitiv, shares went up 8.3% after the market closed after Redmond, Washington-based Microsoft reported that its profits for the fiscal third quarter were $2.45 per share, which was more than Wall Street had expected ($2.23).
Bob O’Donnell, an analyst for TECHnalysis Research, said, “The bottom line is that, despite all the worries that the sky is falling in big tech, companies still see value in cloud computing, and a huge percentage of workloads can still be moved to the cloud.”
Visible Alpha asked 23 analysts and got the same answer from all of them: analysts expected growth of 26.6% for Microsoft’s cloud business Azure in the last quarter, but Microsoft said it grew by 27%.
Alphabet Inc., which has a big cloud business and also had good results on Tuesday, saw its shares go up by 2.4% after the bell. Because of these results and those of Microsoft, shares of Amazon.com Inc, another big cloud provider, went up by 4.8% in trading after hours.
Refinitiv says that Microsoft’s revenue for the quarter that finished in March went up 7% to $52.9 billion, which was just a bit more than the $51.02 billion that analysts had predicted.
Most of Microsoft’s sales still come from selling customers software and cloud computing services. But this year, the company has been in the news because it teamed up with the company that made ChatGPT and used AI technology to improve the Bing search engine.
On a conference call with investors, CEO Satya Nadella said that the company had more than 2,500 Azure-OpenAI customers and that AI was used in a wide range of goods.
Bing has been a close second to Google’s search engine for a long time. However, it now has 100 million daily users and has seen a rise in downloads since AI features were added, Nadella said.
Analysts thought that the bad economy would hurt Microsoft’s Windows business, which relies heavily on PC sales, which have been falling in recent quarters. Refinitiv data shows that analysts expected the sales drop in the area to be worse than it was. Microsoft reported revenue of $13.3 billion, while analysts expected $12.19 billion.
Refinitiv says that the company’s productivity segment, which includes its Office software and ad sales for the LinkedIn social networking site, also made more money than analysts expected, with $17.5 billion in sales compared to $16.99 billion.