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Key Points

• Microsoft stock is surging today after the company published better-than-expected sales and earnings results for fiscal Q3.

• Sales for Azure and other services rose 33% year over year in fiscal Q3, helping to push revenue for the intelligent cloud segment up 21% annually.

• Microsoft's forward guidance suggests that the company will continue to see strong tailwinds from artificial intelligence (AI).

Microsoft (NASDAQ: MSFT) stock is shooting higher in Thursday's trading after the company published strong quarterly results. The tech giant's company's share price was up 9.2% as of 12:15 a.m. ET and had been up as much as 10.6% earlier in the session.

After the market closed yesterday, Microsoft released results for the third quarter of its current fiscal year, which ended March 31. The company posted better-than-expected sales and earnings, driven by impressive growth for its Azure cloud infrastructure business, and issued encouraging forward guidance.

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Microsoft stock surges on strong Q3 results

In fiscal Q3, Microsoft posted earnings per share of $3.46 on sales of $70.06 billion. For comparison, the average analyst estimate had called for the business to report per-share earnings of $3.22 on sales of $68.44 billion.

Overall revenue for the period was up roughly 13% year over year, with a big performance beat relative to expectations, driven by sales for the intelligent cloud segment rising 21% year over year to reach $26.8 billion. Within the segment, revenue for Azure and other services was up 33% year over year. Meanwhile, sales for the productivity and business processes segment rose 10% to $29.9 billion, and the more personal computing segment grew sales 6% year over year to hit $13.4 billion.

What's next for Microsoft?

Microsoft paired its Q3 sales and earnings beats with a strong outlook for fiscal Q4. Management expects sales to come in between $73.15 billion and $74.25 billion this quarter -- good for growth of roughly 14% year over year at the midpoint of the guidance range. Heading into yesterday's earnings report, the average analyst estimate had called for the business to post sales of $72.26 billion in the period.

Crucially, Intelligent Cloud segment revenue is projected to come in between $28.75 billion and $29.05 billion -- representing annual growth of 21% at the midpoint. Sales from Azure are projected to be up between 34% and 35% in the quarter. Strong guidance for the cloud segment suggests that Microsoft is continuing to see big tailwinds from artificial intelligence (AI), and the performance targets are helping to allay investor concerns that momentum was fading on that front.