Microsoft beats on top and bottom lines with 40% Azure growth

microsoft beat earnings and revenue estimates in its fiscal third quarter, but shares slipped 2% on wednesday anyway. adjusted earnings came in at $4.27 per share on $82.89 billion in revenue, above the $4.06 and $81.39 billion analysts expected. azure and other cloud services grew 40%, slightly ahead of the 39.3% streetaccount consensus. the intelligent cloud segment pulled in $34.68 billion, beating estimates. microsoft now has over 20 million seats for its 365 copilot ai add-on, up from 15 million in january. annualized ai revenue hit $37 billion, up 123%. capital spending was $31.9 billion, below the $34.9 billion analysts expected. gross margin narrowed to 67.6%, the tightest since 2022, as depreciation from data center build-out increased. the more personal computing unit, including windows and xbox, fell 1% to $13.19 billion. microsoft stock is down 12% so far in 2026.