Microsoft shares experienced a significant surge on Thursday, climbing nearly 9% to reach approximately $430. This sharp increase was primarily driven by the company’s impressive fiscal third-quarter earnings report released after the market closed on Wednesday.
Microsoft reported revenue of $70.1 billion and adjusted earnings per share (EPS) of $3.46 for the quarter ending March 31, 2025. These figures comfortably surpassed Wall Street expectations, which had estimated revenue around $68.4 billion and EPS of about $3.21. The company’s net income rose 18% year-over-year to $25.8 billion.
A major contributor to this strong performance was the exceptional growth in Microsoft’s cloud computing division, Azure. Azure’s revenue increased by 33% year-over-year, exceeding analyst projections of around 30%.
Notably, artificial intelligence services accounted for a significant portion of this growth, indicating robust demand for Microsoft’s AI capabilities and easing concerns about a potential slowdown in AI spending. Microsoft Cloud revenue overall reached $42.4 billion, up 20% year-over-year.
Furthermore, Microsoft provided optimistic guidance for its fiscal fourth quarter, projecting total revenue between $73.15 billion and $74.25 billion, significantly above consensus estimates. The company anticipates continued strong growth in Azure, forecasting revenue growth between 34% and 35% for the segment.
The better-than-expected results and strong forward guidance alleviated investor concerns about potential impacts from macroeconomic uncertainties or capacity constraints.
Consequently, numerous financial analysts raised their price targets for Microsoft stock, expressing confidence in the company’s AI-driven growth trajectory. This positive sentiment and validation of Microsoft’s AI strategy fueled the substantial rally in its stock price today.