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Microsoft beats expectations with strong AI-driven growth in Q3 results

Bruno T
Latest News
January 31 2024 2:56AM

At the end of trading on Tuesday (30), Microsoft (NASDAQ:MSFT) presented fiscal third-quarter results for December, surpassing Wall Street estimates and demonstrating significant progress in its artificial intelligence (AI) strategy.

The company reported total revenue of $62 billion, beating estimates by about $1 billion. Earnings per share were $2.93, above analyst expectations of $2.76 per share.

Microsoft beat revenue expectations across all three of its business segments. The highlight was the 30% growth in revenue from Azure and other cloud solutions, driven by AI, which contributed six percentage points to this growth.

CEO Satya Nadella emphasized the large-scale application of AI across industries and said the company is winning new customers and generating productivity benefits.

Results included revenue of $25.9 billion in the Intelligent Cloud segment, $19.2 billion in the Productivity and Business Processes segment (which includes Office), and $16.9 billion in the More Personal Computing segment (which includes Surface hardware and gaming business).

The company highlighted that Microsoft Cloud, encompassing Azure and other cloud-related businesses, generated revenue of US$33.7 billion in the quarter.

Gross margin rose to 68%, and operating margin reached 44%. Microsoft also increased capital spending, reflecting investments in cloud and AI.

The company did not provide detailed numbers on the progress of Microsoft 365, but announced that it had surpassed 400 million business users.

Price Target

TD Cowen Raises Price Target on Microsoft to $455 From $425, Keeps Outperform Rating…

Melius Research Raises Price Target on Microsoft to $475 From $444, Keeps Buy Rating…

Wedbush Raises Microsoft’s Price Target to $475 From $450 After Higher-Than-Consensus Fiscal Q2 Results, Keeps Outperform Rating…

Citigroup Adjusts Price Target on Microsoft to $480 From $470, Keeps Buy Rating…

JPMorgan Raises Price Target on Microsoft to $440 From $385, Keeps Overweight Rating…

Evercore ISI Raises Price Target on Microsoft to $475 From $432, Keeps Outperform Rating…

Morgan Stanley Lifts Price Target on Microsoft to $465 From $450, Notes Fiscal Q3 Margin Guidance ‘Significantly Ahead of Expectations,’ Keeps Overweight Rating…

Bernstein Raises Price Target on Microsoft to $465 From $406, Keeps Outperform Rating…

Macquarie Raises Price Target on Microsoft to $450 From $430, Keeps Outperform Rating…

Raymond James Raises Price Target on Microsoft to $450 From $400, Keeps Outperform Rating…

RBC Boosts Price Target on Microsoft to $450 From $415, Cites ‘Another Solid Quarter,’ Keeps Outperform Rating…

Barclays Raises Price Target on Microsoft to $475 From $421, Keeps Overweight Rating…

Loop Capital Raises Price Target on Microsoft to $500 From $425, Keeps Buy Rating…

Wells Fargo Raises Price Target on Microsoft to $460 From $435, Keeps Overweight Rating…