A Microsoft beat revenue and profit estimates for the third quarter released on Thursday (25), driven by the growing adoption of artificial intelligence (AI) in your cloud services. The company's shares rose more than 4% in extended trading.
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Executives forecast ranges for the current quarter's cloud revenue that were mostly above Wall Street targets. The increase in the value of the company's shares Microsoft after market close increased the company's market value by US$ 128 billion, as profit and revenue growth outpaced higher-than-expected capital expenditures. In contrast, the market value of Meta, the parent company of Facebook and Instagram, fell $200 billion on Wednesday after the company warned of rising AI spending and issued a lower-than-expected revenue forecast.
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The revenue from Microsoft grew 17% to $61,9 billion in the quarter ending in March, surpassing the consensus estimate of $60,80 billion, according to LSEG data. Earnings per share of $2,94 beat Wall Street's target of $2,82.
At the same time, the company's capital expenditure Microsoft AI-powered data in the third quarter were nearly $1 billion more than analyst estimates. Capital spending rose from $11,5 billion in the previous quarter to $14 billion, surpassing estimates of $13,14 billion, according to Visible Alpha.
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“We continue to see customer demand grow significantly,” said Brett Iversen, vice president of investor relations at Microsoft to Reuters. “So we’re making sure we size our available capacity accordingly.”
Shares soared with the launch of Microsoft of generative artificial intelligence (genAI) tools based on its strategic partnership with OpenAI, helping the company to win the title of most valuable company in the world of Apple this year. A Microsoft has special access to the company's coveted AI technologies OpenAI, which it has been working to infuse across its entire product portfolio, such as Azure, Bing, and also Microsoft 365, which includes Word, Excel and Powerpoint.
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