To The Moon

In the US market after-hours yesterday, $Microsoft(MSFT)$ released its third-quarter report for fiscal year 2024, corresponding to the performance as of March 31, which far exceeded market expectations, sending its share price up 4.3%.

Specifically, Microsoft revenue was $61.86 billion in the third quarter, up 17% year-on-year, exceeding analyst expectations of $60.9 billion, and even beating the management's guidance ceiling of $61 billion.

Breaking it down by business segments:

• Intelligent Cloud revenue was $26.7 billion, up 21% year-on-year, exceeding the upper limit of 26.3 billion guidance given by management;

• Productivity and Business Processes revenue was $19.57 billion, up 11.7% year-over-year and approaching the upper end of management's guidance of $19.6 billion;

• Personal Computing revenue was $15.58 billion, up 17.5% year over year, exceeding the upper limit of management's guidance of $15.1 billion:

• But the real star is Microsoft's Cloud business, which revenue was $35.1 billion, a 23.2% year-on-year increase.

By product, Azure and other cloud services saw a whopping 31% year-on-year growth, exceeding the 30% growth in the previous quarter. The CFO attributed 7% of that growth to AI, up from 6% in the previous quarter.

AI has penetrated every Microsoft products, driving robust market demand. Take the GitHub programming platform, for instance - it saw paid user numbers surge to 1.8 million in the third quarter, up from just 1.3 million in the previous quarter!

From a commercial remaining performance obligation perspective, the third quarter saw a whopping $235 billion, a 19.9% year-on-year increase. AI technology is delivering real revenue for Microsoft!

Benefiting from the strong demand for AI, Microsoft is gearing up to increase its capital expenditure. Its spending for fiscal year 2024 has already reached $36.7 billion in fiscal 2024, far more than the full year 2023 of $31.9 billion.

And Microsoft isn't stopping there, it plans to continue increasing capital expenditure in fiscal year 2025!

For the next quarter, Microsoft expected:

• Intelligent Cloud revenue to be $28.4-$28.7 billion, representing a mid-point growth rate of 19%;

• Productivity and Business Processes revenue is expected to be $19.9-$20.2 billion, with a median growth rate of 9.6%;

• Personal Computing revenue is expected to be $15.2-$15.6 billion, with a mid-point growth rate of 10.8%.

• Azure and other cloud services are expected to grow at a rate of 30% to 31% in the fourth quarter, exceeding market expectations.

Overall, Microsoft's financial report is extremely impressive. AI's impact on the business is boosting market expectations and giving investors plenty of imagination.

Even a giant worth $3 trillion can dance like an elephant sometimes. AI is truly a revolution on the scale of the Industrial Revolution!