Microsoft Surpasses Q3 Expectations, AI Revenue Surges 123% Year-Over-Year
April 30, 2026 - 02:12
Microsoft delivered better-than-expected financial results for its fiscal third quarter on Wednesday, driven by robust growth in its artificial intelligence business. The tech giant reported earnings that topped analyst estimates, with a standout performance from its AI-related services.
The company’s AI business revenue surged 123% compared to the same period last year, marking a significant acceleration in adoption across enterprise and consumer segments. This growth was fueled by increased demand for Azure OpenAI services, Copilot integrations across Microsoft 365, and other AI-powered tools. Microsoft’s Intelligent Cloud segment, which includes Azure, posted strong results, with Azure revenue growing 31% year-over-year, exceeding market forecasts.
Total revenue for the quarter reached $61.9 billion, up 17% from a year ago, while net income climbed to $21.9 billion, or $2.94 per share, compared to $18.3 billion, or $2.45 per share, in the prior-year quarter. Analysts had projected earnings of $2.82 per share on revenue of $60.8 billion, according to consensus estimates.
“Our AI transformation is reshaping every layer of the technology stack and every role in the organization,” said Satya Nadella, Microsoft’s chairman and CEO, in a statement. He emphasized that the company is seeing AI adoption accelerate as customers integrate its capabilities into critical business workflows.
Microsoft’s Productivity and Business Processes segment, which includes Office and LinkedIn, reported revenue of $20.3 billion, up 12%. The More Personal Computing division, encompassing Windows, Xbox, and Surface, generated $15.6 billion, a 17% increase, partly due to strong PC market recovery and gaming growth.
Despite the positive results, Microsoft shares experienced modest volatility in after-hours trading as investors weighed the high capital expenditures required to support AI infrastructure. The company’s capital spending rose to $14 billion in the quarter, primarily driven by investments in data centers and AI hardware.
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