Microsoft's earnings report lands after stock's worst quarterly performance since 2008
Microsoft reported stronger-than-expected fiscal third-quarter results, with earnings per share at $4.27 adjusted (vs. $4.06 expected) and revenue at $82.89 billion (vs. $81.39 billion expected). Revenue grew 18% year over year, with net income rising to $31.78 billion ($4.27 per share), up from $25.82 billion ($3.46 per share) in the prior year. Adjusted earnings exclude a $14 million decrease from Microsoft's OpenAI investments. Cloud services (Azure) revenue surged 40%, exceeding analyst expectations (39.3% and 38.8% from StreetAccount and CNBC). The Intelligent Cloud segment (Azure, server products, GitHub, Nuance) posted $34.68 billion in revenue, surpassing the $34.27 billion consensus. The Productivity and Business Processes segment (Office, LinkedIn, Dynamics) generated $35.01 billion, up 17% and above StreetAccount’s $34.43 billion estimate. Microsoft now has over 20 million seats for 365 Copilot, up from 15 million in January. Personal Computing revenue ($13.19 billion) declined 1% (consensus: $12.73 billion), while AI revenue grew 123% to $37 billion annually. Microsoft’s commercial performance obligations totaled $627 billion, up $2 billion from the prior quarter. Key retirements included Rajesh Jha (Office leader) and Phil Spencer (gaming chief). Microsoft stock fell 12% in 2026, marking its worst quarter since 2008, driven by concerns over AI’s impact on software and unmet expectations from heavy AI investments. Analysts and investors will discuss results on a conference call at 5:30 p.m. ET.
Source: CNBC