Microsoft reported strong Q3 FY25 earnings, with revenue increasing 13% year-over-year to $70.1 billion, exceeding estimates by $1.6 billion. The operating margin improved to 46%, and earnings per share (EPS) reached $3.46, beating expectations by $0.24.
Key highlights include:
- Azure revenue grew 35% year-over-year (31% in Q2), with 16% of this attributed to AI.
- Commercial cloud revenue was $42.4 billion, up 20% year-over-year, surpassing expectations.
- The Productivity and Business Processes segment generated $29.9 billion, exceeding forecasts.
- The More Personal Computing segment, which includes Windows and gaming, earned $13.4 billion, also above expectations.
Despite strong performance, Microsoft is facing challenges with AI capacity constraints and has decided to slow down some AI projects. The company is also dealing with high inventory levels among device manufacturers due to ongoing tariff uncertainties. Shares rose over 6% following the earnings announcement.
