Microsoft delivered impressive quarterly results on Wednesday, surpassing analysts’ expectations and reshaping its financial outlook for the upcoming fiscal year. The tech giant reported earnings per share of $4.27, compared to the anticipated $4.06, and its revenue reached $82.89 billion, exceeding the projected $81.39 billion. Year-over-year, Microsoft’s revenue grew by 18%, while net income soared to $31.78 billion, up from $25.82 billion in the same quarter the previous year.
In a conference call, Chief Financial Officer Amy Hood addressed the company’s capital expenditures for the year, projecting them to hit a staggering $190 billion, primarily driven by rising memory costs associated with AI demand. This marks a significant 61% increase from last year. Notably, analysts had anticipated capital expenditures at approximately $154.6 billion. Hood noted that the total includes an expected $25 billion impact from elevated component prices.
Microsoft’s Azure cloud services showcased robust growth, with revenue rising by 40%, surpassing both StreetAccount and CNBC predictions of 39.3% and 38.8% respectively. The overall Intelligent Cloud segment, which encompasses Azure, server products, GitHub, and Nuance cloud services, generated $34.68 billion in revenue, eclipsing the $34.27 billion consensus among analysts.
Revenue from Microsoft’s Productivity and Business Processes segment, which includes Office software, LinkedIn, and Dynamics, climbed to $35.01 billion, marking a 17% increase and exceeding the $34.43 billion forecast. The company has also seen a surge in its 365 Copilot AI add-on, with over 20 million commercial subscriptions, a significant increase from 15 million earlier this year.
Despite these robust numbers, Microsoft faces challenges. Its More Personal Computing division, which includes Windows, Xbox, and Surface devices, reported revenues of $13.19 billion, slightly down 1% from expectations. Additionally, while PC shipments grew 4% according to Gartner, sales of Windows licenses were down by 2%, reflecting a competitive landscape.
On the horizon, analysts project a slight dip in the operating margin for the fiscal fourth quarter, expected to fall to 44%, compared to 46.3% the previous year. This contrasts with the StreetAccount consensus of 44.6%.
Microsoft’s recent shift in its relationship with OpenAI, ending exclusive revenue-sharing terms, allows any cloud provider to serve OpenAI’s models, signifying a strategic pivot for both companies. Nadella emphasized the importance of their continued collaboration, stating, “We have a frontier model, royalty-free, with all the IP rights that we will have access to all the way to ’32, and we fully plan to exploit it.”
As the tech industry recalibrates amidst rising oil prices and supply chain uncertainties, Microsoft stock has seen a 12% decline in 2026, following its worst quarterly performance since 2008, due in part to market fears of AI’s potential disruptive impact on software sectors.
With these developments, tech stocks are witnessing a resurgence, marking the best month since April 2020. By focusing on agility and evolution, as Hood noted, Microsoft aims to remain a formidable player in the rapidly changing technological landscape.
Overall, Microsoft stands at a critical juncture, balancing remarkable growth in cloud services and AI while navigating the challenges of market expectations and competitive pressures.
Original Source: https://www.cnbc.com/2026/04/29/microsoft-msft-q3-earnings-report-2026.html
Category :
Tags:
Publish Date: 2026-04-30 07:35:00
