Microsoft (MSFT) has reported better-than-expected first-quarter financial results that were driven higher by accelerating growth in its cloud-computing business.
For what was the company’s fiscal third-quarter, Microsoft announced earnings per share (EPS) of $2.94 U.S. versus $2.82 U.S. that was expected among analysts.
Revenue for the January through March period amounted to $61.86 billion U.S. compared to $60.80 billion U.S. that was forecast. Sales were up 17% year-over-year in the quarter.
Microsoft attributed the earnings beat largely to strong growth in its Azure cloud-computing unit.
The company’s Intelligent Cloud segment, including the Azure public cloud, Windows Server, Nuance and GitHub, earned $26.71 billion U.S. in revenue during the quarter.
That was up 21% from the previous year and ahead of the $26.26 billion U.S. expected among analysts.
Revenue from Azure and other cloud services grew 31%, compared with 30% in the previous quarter. Analysts had expected growth of 28.6%.
Within Azure, seven percentage points of the growth was related to artificial intelligence (AI), up from six percentage points of impact in the previous quarter.
Microsoft provides cloud services for the ChatGPT chatbot from start-up OpenAI, and companies have been increasingly adopting Azure AI services, said Microsoft.
Other highlights from the earnings report include revenue from the Xbox video game unit rising 62% year-over-year due to a lift from its $68 billion U.S. acquisition of Activision Blizzard, which makes popular game titles such as “Call of Duty.”
Sales of Windows licenses to device makers rose 11% in Q1. During the quarter, Microsoft introduced Surface computers with a key for quickly accessing its Copilot AI chatbot.
The company has begun selling access to the Copilot chatbot for small businesses with Microsoft 365 productivity software subscriptions.
In term of guidance, Microsoft said that it expects $64 billion U.S. in revenue for the current second quarter of the year, slightly below the $64.50 billion U.S. consensus of analysts.
The stock of Microsoft has increased 35% over the last 12 months to trade at $399.04 U.S. per share.