Microsoft results top Wall Street targets; world’s most valuable company driven by AI investment

Microsoft beat Wall Street estimates for third-quarter revenue and profit on Thursday, driven by gains from adoption of artificial intelligence across its cloud services, and the world’s most valuable company’s shares jumped more than 4% in extended trade.

Yuvraj Malik, Anna Tong, and Stephen Nellis for Reuters:
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The rise in Microsoft shares after the bell lifted the company’s stock market value by $128 billion as profit and revenue growth overshadowed its higher-than-expected capital expenditures.

“Microsoft’s AI-powered earnings demonstrate that doubling down on innovation is paying off,” said Jeremy Goldman, senior director of briefings at Emarketer, pointing to the company’s early moves in generative AI, such as its large investment in ChatGPT maker OpenAI.

Microsoft revenue rose 17% to $61.9 billion in the quarter ended March, exceeding the consensus estimate of $60.80 billion, according to LSEG data. Earnings per share of $2.94 topped Wall Street’s target of $2.82.

Microsoft’s AI-driven capital expenditures in the third quarter were nearly $1 billion more than analysts’ estimates. Capital expenditures grew from $11.5 billion in the previous quarter to $14 billion, passing estimates of $13.14 billion, according to Visible Alpha.

“We’re continuing to see customer demand grow quite a bit,” Brett Iversen, Microsoft’s vice president of investor relations told Reuters. “And so we’re making sure to scale our available capacity in line with that.”

The stock has soared on Microsoft shipping generative AI (GenAI) tools based on its strategic partnership with OpenAI and also helped it capture the world’s most valuable company crown from Apple this year.

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MacDailyNews Take: Microsoft’s early moves in GenAI are clearly paying off.
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