(Bloomberg) — Microsoft Corp.’s Quarterly Sales and Profit rose more than expected, driven by enterprise demand for the software maker’s cloud and artificial intelligence offerings.
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Revenue for the third quarter, ended March 31, rose 17 percent to $61.9 billion, while profit rose to $2.94 per share, the company said in a statement Thursday. communicated. Analysts on average estimate earnings per share of $2.83 on revenue of $60.9 billion. Stocks jumped late in the session.
CEO Satya Nadella has infused Microsoft’s entire product line with AI technology from partner OpenAI. The gamble is starting to pay off, with some customers adding AI tools that summarize documents and generate content or signing up for Azure cloud subscriptions that include OpenAI products.
“Microsoft’s generative AI-specific revenue has already become a key driver of the stock,” said Dan Morgan, senior portfolio manager at Synovus Trust Co. “Microsoft appears to be in a great position to prosper.”
Azure revenue grew 31% in the quarter, above an average forecast of 29% and up slightly from 30% growth in the prior period. About 7% of this increase was attributable to AI, compared to 6% in the previous quarter.
The company forecasts Azure growth for the current period, ending June 30, of 30% to 31%, higher than the expectations of 29% of analysts surveyed by Bloomberg. For the fiscal year that begins July 1, Microsoft expects growth of more than 10% in sales and operating income.
“You’re seeing healthy growth in Azure, in both non-AI and AI services, which is important,” CFO Amy Hood said in an interview. “While the long-term AI monetization opportunity is still early, we are happy with where we are.” The company is pleased with what it has seen so far in terms of customer adoption, she said.
Nadella told analysts on a conference call that Azure had taken market share from competitors, without elaborating. More than 65% of Fortune 500 companies use Azure OpenAI, the cloud service that gives customers access to the latest OpenAI technology.
Revenue from commercial cloud products increased 23% to $35.1 billion, Microsoft said. Commercial bookings, a measure of future revenue, rose 29%, “much more than expected,” Hood said.
Microsoft shares gained about 5% in late trading. They closed at $399.04 in New York. The stock soared 12% in the March quarter on optimism that the company’s early lead in launching generative AI products would boost sales.
AI Assistants
Microsoft has leveraged its $13 billion investment in search pioneer OpenAI to create a series of AI assistants and other features. It builds these features into products ranging from Windows to Office, security software to the Bing search engine, many of which incur additional fees for customer use.
The company is spending heavily to expand its global network of data centers to meet the rising…
