Microsoft Soars 8.13% on Strong Cloud, AI Earnings

On May 1, 2025, Microsoft's stock surged by 8.13% in pre-market trading, reflecting a strong market response to its recent financial performance.

Microsoft's latest financial report for the third quarter of 2025 showcased impressive results, driven by robust growth in its cloud computing and AI sectors. The company reported a 13% year-over-year increase in revenue, reaching $700.7 billion, which surpassed market expectations of $684.2 billion. Net income also saw a significant rise, increasing by 18% to $258.24 billion, with adjusted earnings per share at $3.46, exceeding the anticipated $3.21.

The company's Intelligent Cloud segment was a standout performer, generating $268 billion in revenue, a 21% increase from the previous year. This growth was largely attributed to the Azure cloud service, which saw a 33% revenue surge. The Personal Computing segment also contributed positively, with revenue growing by 6% to $134 billion, driven by an 8% increase in Xbox content and services, as well as a 21% rise in search and news advertising revenue.

Microsoft's continued investment in AI and cloud infrastructure is evident in its capital expenditure, which reached $167.5 billion for the quarter, a 53% increase year-over-year. This investment is aimed at expanding data centers and acquiring AI chips, reflecting the company's commitment to maintaining its competitive edge in these critical areas. The company's leadership has emphasized the importance of cloud computing and AI in driving business growth and efficiency.

Looking ahead, Microsoft has provided a positive outlook for the next quarter, projecting revenue between $731.5 billion and $742.5 billion, with Azure cloud revenue expected to grow by 34% to 35%. The company also plans to invest $800 billion in data center construction this year, with a focus on increasing AI training capacity by fivefold by 2026. This strategic investment underscores Microsoft's confidence in the long-term potential of AI and cloud technologies.