Microsoft shares up 8.3% as AI features give a boost to sales

The company forecast that revenue in its main segments for the current quarter would match or top Wall Street targets.

Shares gained 8.3% in after-market trading following a report by the Redmond, Washington-based technology company that profits were $2.45 a share in the fiscal third quarter, beating Wall Street estimates of $2.23, according to data from Refinitiv and up 10% from the same quarter last year.

In regular trading, fears about earnings had sent Microsoft down 2.2%, making it the biggest drag on the S&P 500 on Tuesday ahead of its report.

Revenue rose 7% to $52.9bn in the quarter ended March, inching past the average analyst estimate of $51.02bn, according to Refinitiv. The bulk of Microsoft sales still come from selling software and cloud computing services to customers.

But the company has grabbed headlines this year with its partnership with ChatGPT creator OpenAI and sprucing up the Bing search engine with artificial intelligence technology.

Microsoft said growth at its cloud business Azure was 27% in the latest reported quarter, beating analyst expectations for 26.6% growth, according to the consensus from 23 analysts polled by Visible Alpha.

Chief executive Satya Nadella told investors on a conference call that the company had more than 2,500 Azure-OpenAI service customers and AI-powered features in a wide array of products.