April 25 (Reuters) – Microsoft Corp ( MSFT.O ) beat Wall Street estimates for quarterly revenue and profit on Tuesday, driven by growth in its cloud computing and Office productivity software businesses, and the company said artificial intelligence products are boosting sales.
The company forecast revenue in its main segments for the current quarter will match or top Wall Street targets.
Shares rose 8.3% in aftermarket trading after Redmond, Wash.-based Microsoft reported that profit was $2.45 per share in its fiscal third quarter, beating Wall Street estimates of $2.23, according to data from Refinitiv.
“The bottom line is that despite all the worries about the sky falling in big tech, the truth is that businesses still see value in cloud computing and there is still a huge percentage of workloads that can be moved to the cloud,” said Bob O’Donnell, analyst for TECHnalysis Research.
Microsoft said growth in its Azure cloud business was 27% in the last reported quarter, beating analysts’ expectations of 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, reported strong results on Tuesday, lifting its shares 2.4% after hours. Those results and Microsoft’s helped push shares of Amazon.com Inc ( AMZN.O ), another major cloud operator, up 4.8% in after-trade.
Microsoft’s revenue rose 7% to $52.9 billion in the quarter ended in March, matching previous analyst estimates of $51.02 billion, according to Refinitiv.
The bulk of Microsoft sales still come from selling software and cloud computing services to customers. But the company has grabbed headlines this year with its partnership with ChatGPT creator OpenAI and sprucing up the Bing search engine with artificial intelligence technology.
CEO Satya Nadella told investors on a conference call that the company had more than 2,500 Azure-OpenAI customers and said AI was integrated into a wide range of products.
Bing, which long also went to search engine Google, has 100 million daily users and has seen downloads jump after the AI features were added, Nadella said.
Analysts had expected a bleak economic outlook to hit Microsoft’s Windows business, which depends heavily on PC sales that have fallen in recent quarters. The sales decline in the segment was less severe than analysts expected, and Microsoft reported revenue of $13.3 billion against analyst estimates of $12.19 billion, according to Refinitiv data.
The company’s productivity segment, which includes its Office software and ad sales for LinkedIn’s social networking site, also beat analysts’ expectations with revenue of $17.5 billion versus estimates of $16.99 billion, according to Refinitiv.
Reporting by Yuvraj Malik in Bengaluru; Editing by David Gregory
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Reports on global trends in computing from covering semiconductors and tools to manufacture them to quantum computing. Has 27 years of experience in reporting from South Korea, China and the USA and has previously worked for the Asian Wall Street Journal, Dow Jones Newswires and Reuters TV. In her spare time, she studies mathematics and physics with the aim of getting to grips with quantum physics.