Microsoft slips despite topping Q3 forecasts

(Sharecast News) - Microsoft traded lower in extended trading on Wednesday despite the tech giant posting stronger‑than‑expected third‑quarter results, with capital spending coming in below forecasts.

Adjusted earnings per share rose to $4.27, ahead of the $4.06 expected, while revenue grew 18% year‑on‑year to $82.89bn for the three months ended 31 March. Net income increased to $31.78bn from $25.82bn a year earlier.

Quarterly capital expenditure and finance leases totalled $31.9bn, up 49% yeat-on-year but below the $34.9bn expected, while gross margins narrowed to 67.6% - the lowest since 2022, reflecting higher depreciation tied to Microsoft's data‑centre build‑out.

Azure and other cloud services delivered 40% revenue growth, ahead of analyst expectations, while the wider intelligent cloud unit generated $34.68bn of revenue, topping the $34.27bn consensus.

Productivity and business processes revenue rose 17% to $35.01bn, also ahead of forecasts, diven by Office, LinkedIn and Dynamics.

Microsoft said annualised AI‑related revenue had reached $37bn, up 123% year-on-year, including income from customers running AI workloads on Azure, as well as the company's own AI tools.

Reporting by Iain Gilbert at Sharecast.com