Microsoft Corporation (NASDAQ:MSFT) shares slipped Thursday despite the company delivering strong third-quarter financial results driven by cloud and artificial intelligence demand.

The tech giant reported revenue of $82.9 billion for the quarter, marking an 18% increase from last year and surpassing the $81.39 billion consensus estimate.

Microsoft posted earnings of $4.27 per share, exceeding analyst expectations of $4.06 per share.

In the quarterly conference call, Chief Executive Officer Satya Nadella highlighted continued momentum in cloud computing, which generated $54 billion in revenue during the quarter.

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The CEO said the company’s artificial intelligence business crossed $37 billion in annual recurring revenue, reflecting rapid expansion.

Following the results, Truist Securities analyst Terry Tillman reiterated a Buy rating, lowering the price forecast from $675 to $575.

Scotiabank analyst Patrick Colville maintained a Sector Outperform, lowering the price forecast from $600 to $550.

AI And Cloud Growth

Nadella emphasized that Microsoft is investing heavily in infrastructure and software to lead the emerging AI-driven computing era.

The company added significant data center capacity and improved efficiency across its systems to support rising demand.

“Beyond Fabric and Foundry, we are also helping knowledge workers build agents with tools like Copilot Studio,” said Nadella. “Nearly 90% of the Fortune 500 now have agents built with our low-code, no-code tools, and we are seeing fast growth of our Copilot credit-consumptive offer, up nearly 2x quarter over quarter, as customers increasingly extend Copilot with custom agents tailored to their workflows.”

Microsoft also expanded its AI model offerings and enterprise tools, allowing customers to deploy advanced applications across industries.

Product Innovation

The company continued to enhance its Copilot offerings, which are integrated across productivity, development and security platforms.

Microsoft reported strong adoption, with millions of users and increasing enterprise deployment of AI-powered tools.

Chief Financial Officer Amy Hood said the company exceeded expectations across revenue, operating income and earnings.

Investment And Margins

Microsoft increased spending on AI infrastructure, including data centers, chips and research.

These investments slightly pressured margins but supported long-term growth and efficiency improvements.

The company reported capital expenditures of $31.9 billion during the quarter, reflecting continued infrastructure expansion.

Outlook

Microsoft expects fourth-quarter revenue between $86.7 billion and $87.8 billion. The company anticipates continued strong demand for cloud and AI services, though supply constraints may persist.

Related Stocks: Investors are also tracking Alphabet Inc. (NASDAQ:GOOGL) and Amazon.com, Inc. (NASDAQ:AMZN) amid rising AI competition.

MSFT Price Action: Microsoft shares were down 1.52% at $418.01 during premarket trading on Thursday, according to Benzinga Pro data.

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