Microsoft shares jumped 9.16%, a much-needed win for a company that had lagged most mega-cap tech peers over the past year. Following the Q1 report, the stock surged 7% in after-hours trading, as all major business segments exceeded expectations, led by Azure’s outperformance.
This strong showing made Microsoft the only “Magnificent Seven” stock to have recovered its year-to-date losses.
Even more impressively, Microsoft provided an upbeat forecast for the upcoming quarter ending in June. This exceeded analysts’ expectations and helped ease investor concerns over a potential slowdown in cloud growth and the burden of heavy AI spending.
CEO Satya Nadella highlighted Microsoft’s continued demand momentum into April. CFO Amy Hood added that demand signals had remained consistent across business lines throughout the month.
This suggests that large enterprises—Microsoft’s core customers—are not yet cutting their tech budgets. Nadella emphasized that software remains a vital tool to combat “inflationary pressure and growth expectations under constrained resources.”
Microsoft now projects Q4 revenue of $73.7 billion, 2% above consensus.
For the quarter ended March, Microsoft posted 13% YoY revenue growth, reaching roughly $70 billion. Operating income rose to $32 billion, beating consensus by 6%. Azure revenue alone climbed 35%, surpassing the expected 31% growth.
Net income hit $25.8 billion, or $3.46 per diluted share, well above the forecasted $3.22.
CapEx came in at $21.4 billion, about $1 billion lower than analysts expected. AI and cloud computing demand remain key drivers of that spending.
Nadella reaffirmed that Microsoft is benefiting from strong demand for AI and cloud computing, as customers look for scalable, intelligent infrastructure solutions.
CapEx is a closely watched metric among major tech firms investing heavily in AI. Meta Platforms, for example, raised its 2024 CapEx outlook by 11% to $72 billion.
Hood noted that Microsoft’s CapEx would continue to rise next fiscal year, but at a slower pace than the 57% YoY increase expected for the current year ending in June.
All major Microsoft divisions outperformed guidance. The Productivity and Business Processes segment—including Microsoft 365—generated $29.9 billion in revenue, a 10% YoY increase and above internal projections of up to $29.7 billion.
Personal computing revenue rose 6% YoY to $13.4 billion, above the company’s forecast range of $12.4–$12.8 billion. Microsoft cited elevated PC inventory levels due to trade uncertainty, which it expects to start unwinding in the current quarter. While tariffs pose a long-term risk to PC demand, today’s Microsoft boasts a much more resilient and diversified business mix.
Despite global policy uncertainty, Microsoft is proving that its strategic bets on AI and cloud are delivering results—and strengthening its position among top-tier tech names.
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