Microsoft defies market slump as Azure fuels earnings surge
Redmond, Wednesday, 30 April 2025.
Microsoft’s shares jumped over 6% following a strong Q3 earnings report. Azure cloud growth was a key driver with a 33% increase. Notably, 16 points of this growth are directly attributable to AI. This performance bucks the trend of an overall 7% decline in Microsoft shares this year, outperforming the S&P 500, which saw a 6% drop. Investors are closely watching Microsoft’s AI ventures, especially its relationship with OpenAI, despite a $623 million ‘other expense’ including losses on equity method investments, including OpenAI.
Q3 earnings exceed expectations
Microsoft reported Q3 earnings that surpassed expectations, with earnings per share at $3.46 against an expected $3.22 [1]. The company’s revenue reached $70.07 billion, exceeding the projected $68.42 billion [1]. This financial performance reflects an 18% increase in net income, rising from $21.9 billion to $25.8 billion compared to the previous year [1]. These figures highlight Microsoft’s robust financial health and its capacity to outperform market predictions, bolstering investor confidence.
segment performance
The Intelligent Cloud unit, which includes Azure, generated $26.75 billion in revenue, marking a 21% increase [1]. The Productivity and Business Processes segment also saw growth, with revenue reaching $29.94 billion, a 10% rise [1]. The More Personal Computing segment experienced a 6% increase, bringing in $13.37 billion [1]. These results indicate balanced growth across Microsoft’s diverse business segments, reducing reliance on a single product line and enhancing long-term stability for investors.
analyst perspective
Analysts remain largely positive on Microsoft’s stock, despite some lowering their price targets due to broader economic concerns [6]. All 20 analysts tracked by Visible Alpha have issued ‘buy’ or equivalent ratings for the stock [6]. Wedbush analysts, while lowering their price target to $475 from $550, maintain a long-term bullish outlook, emphasizing the monetization potential of AI in the cloud [6]. Goldman Sachs analysts also maintained a ‘buy’ rating, acknowledging that Microsoft is well-positioned to leverage AI opportunities [6].
market outlook
Microsoft’s Q2 2025 results revealed earnings per share of $3.23 and revenue of $69.6 billion, fueled by a 21% year-over-year surge in cloud revenue [5]. The AI business demonstrated substantial growth, achieving a $13 billion annual revenue run rate, which represents a 175% year-over-year increase [5]. A strong upward movement above $395.50 post earnings could target the $430/$435 resistance level, while a rejection at $395.50 could lead to a test of the $366/$357 support region [5].