Microsoft(US:MSFT) Hua Er Jie Jian Wen·2025-04-30 22:00Core Insights - Microsoft reported better-than-expected sales and profits, driven by cloud expansion, indicating strong customer demand despite economic uncertainties [2] - The company's stock rose approximately 6% in after-hours trading following the earnings report, although it has declined about 6% year-to-date due to broader market sell-offs [2] Financial Performance - Revenue for Q3 reached $70.07 billion, a 13% year-over-year increase, surpassing the expected $68.48 billion [4] - Adjusted earnings per share were $3.46, exceeding analyst expectations of $3.21 and up from $2.94 in the same quarter last year [4] - Net income grew 18% year-over-year from $21.9 billion to $25.8 billion [4] Segment Performance - Cloud revenue for Q3 was $42.4 billion, slightly above the expected $42.22 billion [5] - The "Intelligent Cloud" segment, including Azure, generated $26.75 billion, a 21% increase, exceeding the forecast of $26.16 billion [5] - Azure and other cloud revenue (excluding currency effects) grew 33%, surpassing the Wall Street expectation of 29% [6] AI Contribution - Azure's growth contributed 16 percentage points to the AI business, slightly above the analyst expectation of 15.6 percentage points [6] Productivity and Business Processes - The "Productivity and Business Processes" segment, which includes Office subscriptions and LinkedIn, achieved revenue of $29.94 billion, a 10% year-over-year increase, exceeding the forecast of $29.57 billion [8] - The "More Personal Computing" segment, which includes Windows, search ads, devices, and gaming, reported revenue of $13.37 billion, a 6% increase, also surpassing the expected $12.66 billion [8] Capital Expenditure - Microsoft accelerated data center construction to meet the growing demand for generative AI, with quarterly capital expenditures reaching $16.75 billion, a nearly 53% increase [10] - Total capital expenditures, including leases, were $21.4 billion, marking the first decline in over two years, reflecting reduced investment in data centers [10] Partnership with OpenAI - Microsoft maintains a close partnership with OpenAI, positioning itself as a leader in AI product commercialization [12] - The company announced adjustments to its relationship with OpenAI, retaining priority purchasing rights for additional computing capacity [12] - The quarter included $623 million in "other expenses," primarily related to equity method investments like OpenAI, down from $2.29 billion in the previous quarter [12] Impact of Government Policies - Recent U.S. government policy changes, including tariffs and federal spending cuts, have raised concerns among corporate executives and investors [13] - While tariffs have a limited direct impact on software companies, they may weaken customer demand and increase overall economic costs [13]