On April 30, 2025, Microsoft released its fiscal third-quarter earnings, showcasing impressive growth driven by its cloud and artificial intelligence (AI) segments.
The results not only exceeded market expectations but also underscored the company’s diversified and resilient business model.
Analysts and investors alike praised Microsoft’s performance, with Piper Sandler analyst Brent Bracelin stating to Yahoo Finance, “This story really is all about cloud and AI.”
Microsoft Q3 Earnings Surpass Expectations
Microsoft reported earnings per share of $3.46, surpassing analysts’ predictions of $3.23. Additionally, the company achieved revenue of $70.1 billion, exceeding the forecasted $68.53 billion.
The Intelligent Cloud segment, which includes Azure, experienced a 21% revenue increase, reaching $26.75 billion. Notably, Azure’s revenue grew by 33%, driven by the rising demand for AI-powered solutions.
We saw really "impressive numbers out of Microsoft," Piper Sandler analyst Brent Bracelin says on earnings. Q3 "really showcases how diversified and resilient this business model is, but let's be clear, this story really is all about cloud and AI." pic.twitter.com/o2JK0104Qj
— Yahoo Finance (@YahooFinance) May 1, 2025
Cloud and AI: The Cornerstones of Microsoft’s Success
The growth in Microsoft’s cloud and AI businesses has been remarkable. Brent Bracelin emphasized, “Azure’s annualized revenue run rate could hit $76 billion, thanks to increasing custom AI workloads and strong momentum from OpenAI and GitHub.”
Capital Investments Reflect Microsoft’s AI Ambitions
Microsoft’s commitment to AI is evident in its capital expenditures, which rose by 52.8% to $16.75 billion. These investments are aimed at expanding data center capacity and supporting broader AI adoption. Analysts believe this robust spending will position Microsoft as a leader in the AI-driven cloud market for years to come.
Analysts Remain Optimistic About Microsoft’s Future
Despite macroeconomic challenges, analysts maintain a positive outlook on Microsoft’s long-term prospects. Bracelin noted, “AI is just 2% of sales but could easily 5x to 10%+ within 3-5 years, strengthening a cloud incumbency that has doubled since 2020.”
Microsoft’s Diversified Business Model Shines
The Q3 results highlight Microsoft’s ability to thrive across multiple business segments. While cloud and AI took center stage, other areas, such as productivity tools and gaming, also contributed to the company’s overall success.
