Microsoft Corp (NASDAQ:MSFT) reported better-than-expected fiscal first-quarter earnings, driven by robust growth in its cloud business.
The tech giant posted earnings per share of $3.30, surpassing analysts' estimates of $3.08. Revenue also came in higher than anticipated, reaching $65.6 billion compared to the $64.4 billion forecasted by analysts.
A standout performer was Microsoft’s cloud segment, which reported revenue of $38.9 billion, exceeding expectations of $38.11 billion, a 22% year-over-year increase.
"AI-driven transformation is changing work, work artifacts, and workflow across every role, function, and business process," said CEO Satya Nadella, emphasizing the impact AI is having across Microsoft's operations.
Microsoft's 16% year-over-year revenue growth was driven by strong performances across its divisions. Productivity and Business Processes grew 12% to $28.3 billion, while the Intelligent Cloud unit saw a 20% increase, reaching $24.1 billion.
The More Personal Computing segment, which includes Xbox and Windows, rose 17% to $13.2 billion, though it slightly missed expectations. Azure, Microsoft's cloud service, grew by 33%, and the Activision Blizzard acquisition significantly boosted Xbox content and services revenue by 61%.
Despite the strong results, the company saw slight declines in its gross and operating margins compared to the same period last year, reflecting increased investments in research and development, which rose 13% year-over-year to $7.5 billion.
The firm will provide forward-looking guidance on its conference call.
Shares of Microsoft rose 1.5% following the release of its earnings.