Microsoft shares rose 2.7% in after-hours trading to $546.21 after the company reported quarterly results that exceeded analyst estimates on revenue, operating income and earnings per share.
The company posted revenue of $92.3 billion, up 19% year over year and above the $90.69 billion Wall Street estimate. Adjusted earnings per share came in at $4.89 against a consensus projection of $4.73.
Profitability and segment results
Operating income reached $45.9 billion, a 21% year-over-year increase that beat the estimated $44.06 billion. Adjusted net income was $36.4 billion, surpassing the analyst projection of $35.13 billion.
Under a new reporting structure the company adopted beginning in its fiscal year 2027, revenue is split into two categories:
- AI agents and infrastructure: $76.8 billion, above the $75.6 billion estimate.
- Devices and consumer: $15.5 billion, above the $15.0 billion estimate.
Azure and cloud growth
The report disclosed Microsoft Azure revenue on a standalone basis, showing $33.17 billion, up 48% year over year and ahead of the forecasted 45% growth. Microsoft Cloud revenue was $63.9 billion, representing 30% year-over-year growth.
Capital expenditures totaled $39.4 billion for the quarter, below the estimated $46.59 billion. The company said the CapEx-to-revenue ratio was about 42.7%, reflecting heavy cash deployment into its AI build-out.
Shareholders received $10.2 billion through dividends and share repurchases, while free cash flow reached $18.6 billion, which the report attributed to lighter-than-expected infrastructure spending combined with higher revenue.
Executive comments
Chief executive Satya Nadella pointed to the company's focus on superintelligence, saying: "By helping organizations build and own their own intelligence, and earning trust through agent safety and security, we are translating our innovation into growing adoption and real-world impact across every industry."
Chief financial officer Amy Hood said: "Results exceeded expectations across revenue, operating income, and earnings per share."
Outlook and stock performance
For the next quarter, Microsoft projects revenue of $96.0 billion to $97.1 billion, an 18% to 19% year-over-year growth rate. It also forecasts Azure growth of 49% to 50% and capital expenditures above $50 billion.
The forecasts and capital commitments supported investor sentiment. The stock's 24-hour gains were reported at about 3%, with three-month performance of 17.71%. The average analyst recommendation is a "buy," with an average target price of $610.34.
