Microsoft's Third Quarter 2025 Financial Report Surpasses Expectations: Cloud Services Drive Revenue to Record Highs, Stock Price Jumps Over 6% in After-Hours Trading

Taiwan • Business • 04/30 22:31
Microsoft's Third Quarter 2025 Financial Report Surpasses Expectations: Cloud Services Drive Revenue to Record Highs, Stock Price Jumps Over 6% in After-Hours Trading

On April 30, 2025, Microsoft announced its financial results for the third quarter of the fiscal year 2025, reporting revenue of $70.07 billion, an increase of 13% year-over-year, and a net profit of $25.8 billion, which is an 18% increase year-over-year, both figures exceeded expectations. The cloud and AI sectors experienced strong growth, with Azure's revenue growing by 33% year-over-year. Consequently, Microsoft's stock price increased by over 6% in after-hours trading.

Key Updates

05/01 23:02

Microsoft and Meta's earnings reports beat expectations, lifting major U.S. stock indices on May 1, 2025.

On May 1, 2025, the U.S. stock market saw gains across the board as Microsoft and Meta reported better-than-expected earnings, easing concerns over AI investment returns and the economic outlook. The Dow Jones Industrial Average rose 83.60 points, the S&P 500 rose 35.08 points, the Nasdaq jumped 264.40 points, and the Philadelphia Semiconductor Index rose 17.58 points. The strong performance of Microsoft and Meta led the major stock indices to their eighth consecutive day of gains.

05/01 15:03

On May 1, U.S. stocks rebounded strongly as earnings reports from tech giants lifted the market, with tech giants Microsoft and Meta leading the charge.

On May 1, 2025, U.S. stocks surged across the board as Microsoft and Meta's earnings reports exceeded expectations, with Microsoft's stock price soaring more than 9% intraday and Meta climbing over 6%. TSMC ADR and Nvidia shares also advanced, as the Philadelphia Semiconductor Index rose 1.44%. However, data from the U.S. Department of Labor showed that initial jobless claims unexpectedly rose to 241,000, indicating pressure in the labor market.

05/01 07:02

NVIDIA Uncommonly Rated as Sell by Analyst Jay Goldberg: Slowdown in AI Spending and China-US Geopolitical Risks Pose Challenges

NVIDIA, a US-based AI chip company, was recently rated as a "sell" by Seaport Research analyst Jay Goldberg, a rare occurrence, marking the first time in nearly two years. Goldberg pointed out that AI spending may slow down in the coming years, increased geopolitical tensions between the US and China, and the technical complexity of NVIDIA's system deployments being higher than that of traditional data centers pose challenges to the company's prospects. He lowered NVIDIA's target stock price to $100, below the Wall Street average target price of $161.59, making Seaport Research the only institution with a pessimistic view on the stock.

05/01 06:31

The U.S. stock market dropped sharply due to the triple whammy of GDP contraction, employment slowdown, and inflation pressures.

On April 30, 2025, the U.S. stock market saw significant volatility due to a 0.3% contraction in first-quarter GDP, slowing job growth, and ongoing inflationary pressures. Major indices dropped sharply in the morning session but rebounded in the afternoon after news of U.S.-China trade talks. The energy, steel, and financial sectors were the biggest losers, highlighting worries about an economic slowdown. Even though the market recovered by the end of the day, April's overall performance was poor, with the S&P 500 and Dow Jones indices falling for three straight months.

05/01 06:00

Analyst Jay Goldberg: Advanced Micro Devices and Broadcom could become the new favorites in AI chip investments, while Nvidia is facing pressure on market share and valuation.

Seaport Research Partners analyst Jay Goldberg has rated NVIDIA as a "sell" with a target price of $100 amidst a booming AI chip market, noting that its valuation already aligns with market expectations and faces pressure from customers creating their own chips. On the other hand, he is optimistic about AMD and Broadcom, giving them "buy" ratings with target prices of $100 and $230, respectively, due to their strategic moves and strong execution in the AI and data center markets, potentially making them more attractive investments.

04/30 22:31

Microsoft's Third Quarter 2025 Financial Report Surpasses Expectations: Cloud Services Drive Revenue to Record Highs, Stock Price Jumps Over 6% in After-Hours Trading

On April 30, 2025, Microsoft announced its financial results for the third quarter of the fiscal year 2025, reporting revenue of $70.07 billion, an increase of 13% year-over-year, and a net profit of $25.8 billion, which is an 18% increase year-over-year, both figures exceeded expectations. The cloud and AI sectors experienced strong growth, with Azure's revenue growing by 33% year-over-year. Consequently, Microsoft's stock price increased by over 6% in after-hours trading.

04/30 18:00

Eurozone's GDP increased by 0.4% in the first quarter, exceeding expectations, leading to a rise in European stocks; U.S. economy shrinks unexpectedly by 0.3%.

In the first quarter of 2025, the Eurozone's GDP increased by 0.4% from the previous quarter, exceeding expectations and boosting European stock markets. The U.S. GDP contracted by an annualized 0.3%, marking the first decline in three years, due to an increase in imports and a decrease in government spending. The Eurozone economy continued to grow with support from multiple countries, while the U.S. economy was under pressure due to a widening trade deficit and sluggish job growth.

04/30 15:30

The U.S. GDP shrinkage in the first quarter has led to stock market volatility, and 360,000 Taiwanese mothers are facing the risk of depression.

In the first quarter of 2025, the US GDP declined at an annualized rate of 0.3%, missing the expected 0.4% growth, causing a drop in the three major US stock indices. The Dow Jones dropped 237 points, the S&P 500 fell 61 points, and the Nasdaq plunged 361 points. A survey in Taiwan indicates that about 360,000 mothers exhibit signs of depression, highlighting the pressures from family and society. This article examines US economic data and market reactions, connecting them to the current situation of maternal stress in Taiwan, offering a comprehensive view of the intersection between global economics and mental health.

04/30 13:03

The 'Big Seven' U.S. Tech Giants Stock Rebound Falters: Profit Growth Slows for Companies Such as Microsoft

At the beginning of 2025, the "Seven Giants," a group of American tech giants, saw a rebound, but the latest financial reports show slower profit growth, rising valuation pressure, and a blow to market confidence. Microsoft's earnings report exceeded expectations, but its stock price fell due to a decline in free cash flow margin and uncertainty about AI investment returns. The "Seven Giants" overall profit growth rate fell from 52% in 2024 to 21.4% in 2025. Investors' risk appetites have shifted, with funds moving into gold and other sectors, and analysts are split on their ratings of the "Seven Giants."

04/30 07:05

U.S. stock index futures fell across the board: Dow Jones futures fell 105 points, pressure from tech stocks drags Nasdaq futures down.

On April 30, 2025, at 1:31 PM Taipei time, futures for the three major U.S. stock indices fell. Dow Jones Industrial Average futures fell 105 points to 40,553, down 0.26%; S&P 500 futures dropped 27.25 points to 5,556.5, down 0.49%; Nasdaq 100 futures fell 128 points to 19,514, down 0.65%. Investors are waiting for earnings reports from major U.S. tech companies and economic data, resulting in cautious market sentiment and subdued futures performance.

Cloud and AI Business Drive Growth

Microsoft's impressive performance this quarter was mainly due to the strong momentum of its cloud business. Overall, Microsoft Cloud revenue reached $42.4 billion, a 20% year-over-year increase, slightly above the market expectation of $42.2 billion. The Intelligent Cloud segment's revenue was $26.8 billion, a 21% year-over-year increase, also exceeding the expected $25.99 billion.

Among these, the Azure cloud platform's performance was particularly outstanding, with revenue growing 33% year-over-year, surpassing the market expectation of 29%. Microsoft stated that AI contributed 16 percentage points to Azure's revenue growth, indicating a growing demand for generative AI and cloud infrastructure. CEO Satya Nadella noted in the earnings call, "From AI infrastructure to applications, we are innovating across the board to help customers increase productivity, reduce costs, and accelerate growth."

All Business Segments Exceed Expectations

In addition to the cloud business, Microsoft's other core segments also performed steadily:

  • Productivity and Business Processes: Revenue was $29.9 billion, a 10% year-over-year increase, higher than the market expectation of $29.6 billion. This segment includes Office 365, LinkedIn, and Dynamics products.

    • Revenue from Microsoft 365 commercial products and cloud services grew 11% year-over-year
    • LinkedIn revenue grew 7% year-over-year
    • Dynamics 365 revenue grew 16% year-over-year

  • More Personal Computing: Revenue was $13.4 billion, a 6% year-over-year increase, better than the market expectation of $12.6 billion. This segment includes Windows OEM licensing, Surface devices, Xbox, and search advertising.

    • Windows OEM and devices revenue grew 3% year-over-year
    • Xbox content and services revenue grew 8% year-over-year
    • Search and news advertising (excluding traffic acquisition costs) revenue grew 21% year-over-year

Microsoft noted that despite challenges such as tariff uncertainties and high device inventory, OEM and device revenue still achieved positive growth, reflecting market demand for upgrades as Windows 10 support nears its end.

Solid Financial Metrics, Slight Reduction in Capital Expenditure

This quarter, Microsoft's operating profit was $32 billion, a 16% year-over-year increase; net profit was $25.8 billion, an 18% year-over-year increase. The company also returned nearly $9.7 billion to shareholders through dividends and share repurchases.

Notably, Microsoft's capital expenditure (including leases) this quarter was $21.4 billion, marking the first decline in over two years. This reflects a more cautious approach to data center construction, balancing strong AI and cloud demand with cost control.

Microsoft CFO Amy Hood stated, "We continue to face supply constraints for AI infrastructure, but by expanding server capacity, we are better able to meet customer demand."

Strong After-Hours Stock Reaction

Driven by the better-than-expected earnings report, Microsoft's stock surged over 6% in after-hours trading on April 30, with some reports indicating the increase reached 8% at one point. Investors reacted positively to the strong performance of Azure and AI businesses, significantly boosting market sentiment.

Despite Microsoft's recent "slowdown or pause" strategy in some AI and data center projects and the cancellation of some data center leases, the overall earnings report shows that its core business remains highly resilient and has growth potential.

References

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