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Microsoft (NASDAQ:MSFT) shares surged 8% on Thursday morning after the company reported stronger-than-expected fiscal third-quarter results, led by a 33% jump in Azure and other cloud services revenue.
The tech giant posted earnings per share of $3.46 for the March quarter, beating analysts' expectations of $3.22. Revenue rose 13% from a year earlier to $70.1 billion, also above the $68.44 billion estimate.
Intelligent Cloud revenue climbed to $26.8 billion, surpassing the $25.99 billion consensus, while Microsoft Cloud revenue reached $42.4 billion, up 20% year over year. The Productivity and Business Processes unit brought in $29.9 billion, rising 10%, and More Personal Computing revenue increased 6% to $13.4 billion.
Azure's performance stood out, with its 33% growth topping the 31% forecast. CFO Amy Hood said Azure growth could accelerate to 34%35% in Q4, driven by strong demand across services.
Microsoft opened 10 new data centers globally during the quarter, as it boosts infrastructure to support artificial intelligence capabilities. CEO Satya Nadella said AI and cloud are now core inputs for business transformation.
The company expects Q4 revenue between $73.15 billion and $74.25 billion, and FY26 capital spending to increase at a slower pace than the prior year.
Is Microsoft Stock a Buy Now?
Based on the one year price targets offered by 48 analysts, the average target price for Microsoft Corp is $487.29 with a high estimate of $650.00 and a low estimate of $420.00. The average target implies a upside of +23.28% from the current price of $395.26.
Based on GuruFocus estimates, the estimated GF Value for Microsoft Corp in one year is $496.44, suggesting a upside of +25.60% from the current price of $395.26.
This article first appeared on GuruFocus.