Key Stats:
- Today’s Price Change: 9%
- Current Share Price: $431
- 52-Week High: $468
- Analysts’ Price Target: $492
What Happened?
Microsoft (MSFT) stock has gained close to 9% in early market trading after the tech giant reported stellar fiscal Q3 results that exceeded Wall Street expectations.
In the quarter ending in March, Microsoft reported revenue of $70.07 billion with adjusted earnings of $3.46 per share, compared to estimates of $68.44 billion and $3.22 per share, respectively.
Even more impressive was Microsoft’s forward guidance, projecting revenue between $73.15 billion and $74.25 billion for Q4, which is well above consensus estimates of $72.26 billion.
The company’s Azure cloud business was the standout performer, with revenue growing 33% year-over-year, higher than analysts’ projections of around 30%.
Notably, 16 percentage points of this growth was attributed to AI services. Microsoft’s Intelligent Cloud unit generated $26.75 billion in revenue, exceeding expectations by nearly $600 million.
Despite President Trump’s recently announced tariffs potentially impacting Microsoft’s planned $80 billion investment in AI infrastructure, its strong guidance alleviated investor concerns about tech sector resilience.
What the Market Is Telling Us
The substantial jump in MSFT stock indicates that investors are embracing Microsoft’s AI-driven growth story, despite broader economic uncertainties.
The market is encouraged by Microsoft’s ability to outperform in its cloud business while simultaneously investing heavily in future AI capabilities. Capital expenditures reached $16.75 billion during the quarter, up nearly 53% as the company aggressively builds out its AI infrastructure.
Investors also appear unfazed by Microsoft’s warning of “AI capacity constraints beyond June,” instead viewing this as a positive sign of overwhelming demand for the company’s AI offerings.
With 15 million people now using GitHub Copilot (four times as many as last year), concrete evidence of AI adoption is emerging.
The strong reaction to Microsoft’s results suggests the market believes the company is well-positioned to lead in the AI era, potentially justifying its premium valuation despite macroeconomic headwinds and potential tariff impacts on its global supply chain.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
