April 25 (Reuters) – Microsoft Corp ( MSFT.O ) beat Wall Street’s estimates for quarterly revenue and profit on Tuesday, driven by growth in its cloud computing and office productivity software businesses and the company said sales of artificial intelligence products were spurring.
The company forecast revenue in its key segments for the current quarter will match or top Wall Street targets.
Shares rose 8.3% in after-market trading after Redmond, Washington-based Microsoft reported a fiscal third-quarter profit of $2.45 a share, beating estimates of $2.23, according to data from Refinitiv.
“Despite concerns that the sky is falling in big tech, the reality is that organizations still see value in cloud computing, and there is still a large percentage of workloads that can be moved to the cloud,” said Bob Oh. Donnell, analyst for Technology Research.
Growth in its cloud business Azure was 27% in the latest reported quarter, beating analyst expectations for 26.6% growth, according to a consensus of 23 analysts polled by Visible Alpha.
Alphabet Inc ( GOOGL.O ), which also has a large cloud business, posted strong results on Tuesday, sending its shares up 2.4% after the bell. Those results and Microsoft helped shares of Amazon.com Inc ( AMZN.O ), another major cloud operator, rise 4.8% in after-hours trading.
Microsoft’s revenue rose 7% to $52.9 billion in the quarter ended March, beating past analyst estimates of $51.02 billion, according to Refinitiv.
Most of Microsoft’s sales still come from selling software and cloud computing services to customers. But the company grabbed headlines this year with its partnership with ChatGPT creator OpenAI and its enhancement of the Bing search engine with artificial intelligence technology.
Chief Executive Satya Nadella told investors in a conference call that the company has more than 2,500 Azure-OpenAI service customers and AI is integrated into a wide range of products.
Nadella said Bing, a long-running Google search engine, has 100 million daily users and downloads have increased since adding AI features.
Analysts expected a bleak economic outlook to hit Microsoft’s Windows business, which has depended heavily on PC sales that have slumped in recent quarters. According to Refinitiv data, the sales decline in the segment was less than analysts expected, with Microsoft reporting revenue of $13.3 billion versus analyst estimates of $12.19 billion.
The company’s productivity division, which includes ad sales for its office software and LinkedIn social networking platform, beat analyst expectations of $17.5 billion in revenue and $16.99 billion in revenue, according to Refinitiv.
Yuvraj Malik reports in Bangalore; Editing by David Gregory
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