By Yuvraj Malik, Anna Tong and Stephen Nellis
(Reuters) -Microsoft beat Wall Street estimates for third-quarter revenue on Thursday, driven by gains from AI adoption across its cloud services and business software products.
Revenue rose 17% to $61.9 billion in the quarter ended March, exceeding the consensus estimate of $60.80 billion, according to LSEG data.
Shares of the Redmond, Washington-based company gained 5.5% after the bell. The stock has soared on Microsoft shipping generative AI tools based on its strategic partnership with ChatGPT creator OpenAI and also helped it capture the world’s most valuable company crown from Apple this year.
Revenue from Microsoft’s Intelligent Cloud unit, which houses the Azure cloud computing platform, rose to $26.7 billion, passing the average estimate of $26.24 billion, LSEG data showed.
Azure revenue rose 31%, higher than a 29% growth estimate from market research firm Visible Alpha.
Microsoft does not break out the absolute revenue figure for Azure, the part of its business best situated to capitalize on booming interest in artificial intelligence.
The Copilot tool, a set of genAI assistants launched in November for $30 a month, has lifted Microsoft’s enterprise software and Windows businesses. A recovery in personal computer sales was also a factor.
The More Personal Computing unit revenue increased 17% to $15.6 billion, surpassing analyst expectations of $15.08 billion, according to data from LSEG.
Productivity and Business Processes, Microsoft’s unit that houses office software and LinkedIn, increased revenue 12% to $19.6 billion. Analysts had estimated $19.54 billion, according to data from LSEG.
Microsoft has been spending heavily to support its AI services, and capital expenditures grew from $11.5 billion in the previous quarter to $14 billion, passing estimates of $13.14 billion, according to Visible Alpha.
(Reporting by Yuvraj Malik in Bengaluru; Editing by Sriraj Kalluvila and David Gregorio)
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