Microsoft Q3 results top expectations, driven by Intelligent Cloud strength
Published: 16:25 29 Apr 2026 EDT
Microsoft Corp (NASDAQ:MSFT) reported fiscal third quarter earnings that exceeded Wall Street expectations, driven by continued strength in its cloud and artificial intelligence businesses.
The company posted revenue of $82.9 billion for the quarter ended March 31, up 18% year over year.
Net income rose 23% to $31.8 billion, while diluted earnings per share increased 23% to $4.27 on a GAAP basis. Operating income grew 20% to $38.4 billion.
Microsoft Cloud revenue reached $54.5 billion, an increase of 29%, reflecting ongoing demand for cloud infrastructure and AI-related services. Commercial remaining performance obligation, a measure of future contracted revenue, rose 99% to $627 billion.
The Intelligent Cloud segment generated $34.7 billion in revenue, up 30% from a year earlier and ahead of analyst expectations of about $34.31 billion. Within the segment, Azure and other cloud services revenue climbed 40%.
Revenue in the Productivity and Business Processes segment totaled $35 billion, up 17% year over year and above expectations of roughly $34.48 billion. Growth in the segment was supported by a 19% increase in Microsoft 365 Commercial cloud revenue and a 33% rise in Microsoft 365 Consumer cloud revenue. LinkedIn revenue grew 12%, while Dynamics 365 revenue increased 22%.
The More Personal Computing segment reported revenue of $13.2 billion, down 1% from a year earlier but still ahead of analyst estimates of approximately $12.64 billion. Within the segment, Windows OEM and Devices revenue declined 2%, and Xbox content and services revenue fell 5%. Search advertising revenue, excluding traffic acquisition costs, increased 12%.
“We are focused on delivering cloud and AI infrastructure and solutions that empower every business to eval-max their outcomes in the agentic computing era," said Satya Nadella, chairman and chief executive officer of Microsoft.
“Our AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year.”
Amy Hood, Microsoft’s chief financial officer, added: “We delivered results that exceeded expectations across revenue, operating income, and earnings per share, reflecting strong execution and growing demand for the Microsoft Cloud.”
During the quarter, the company returned $10.2 billion to shareholders through dividends and share repurchases.
Despite the overall earnings beat, Microsoft shares were down about 2% in after-hours trading, as investors looked for faster growth in its Azure cloud business to support its valuation.
Microsoft said it will provide forward-looking guidance during its earnings conference call and webcast.
