Microsoft Q3 Earnings Beat with 40% Azure Growth, $34.9B Capex
MSFT•Microsoft reported adjusted Q3 earnings of $4.27 per share on $82.89B revenue, with Azure revenue up 40%. Capital spending reached $34.9B and is expected to grow faster in fiscal 2026, which could pressure near-term free cash flow.
1. Q3 Financial Highlights
Microsoft delivered adjusted earnings of $4.27 per share on revenue of $82.89 billion for the quarter ended March 31, surpassing consensus forecasts. Commercial backlog rose to $392 billion, indicating substantial contracted revenue ahead.
2. Segment Performance
Azure revenue climbed 40%, contributing to cloud-related sales of $54.5 billion, while Intelligent Cloud generated $34.7 billion. Productivity and Business Processes brought in $35 billion, driven by Microsoft 365, LinkedIn and Dynamics 365, and More Personal Computing produced $13.2 billion.
3. Investment and Outlook
Capital expenditures reached $34.9 billion in Q3, and management projects fiscal 2026 capex growth will outpace fiscal 2025. This elevated investment in data centers and AI infrastructure may constrain free cash flow in the near term despite strong demand for cloud services.
