Microsoft (MSFT) Stock: Q325 Cloud Surge Sparks 9% Rally and New Highs

TLDR

Q3 revenue hit $70.1B (+13%), net income rose 18% to $25.8B. Azure cloud services grew 33%, fueling stock’s 9% surge. AI workloads now drive nearly half of Azure’s growth. FY25 capex guidance reaffirmed at $80B, easing concerns. Wedbush raised MSFT price target to $515 post-earnings.

Microsoft Corporation (Nasdaq: MSFT) delivered a blowout fiscal Q3 report, sending its stock up 9.42% to $432.48 in Thursday’s mid-session trading. The rally erased recent tech losses, lifting Microsoft’s year-to-date gain to 2.84%, outperforming the S&P 500’s 3.90% drop.

Microsoft (MSFT) 

The tech giant posted $70.1 billion in revenue, up 13%, and a hefty $25.8 billion in net income, an 18% increase. Earnings per share came in at $3.46, smashing Wall Street’s $3.22 consensus. The jump was fueled by unstoppable cloud and AI demand.

$MSFT | Microsoft Q3'25 Earnings Highlights

🔹 Revenue: $70.07B (Est. $68.48B) 🟢; UP +13% YoY
🔹 EPS: $3.46 (Est. $3.22) 🟢; UP +18% YoY
🔹 Net Income: $25.8B; UP +18% YoY
🔹 Microsoft Cloud Revenue: $42.4B; UP +20% YoY

Segment Revenue
🔹 Intelligent Cloud: $26.8B (Est.… pic.twitter.com/G9FhxEzFeJ

— Wall St Engine (@wallstengine) April 30, 2025

Azure and AI Power Record Growth

Microsoft’s Azure cloud unit was the star, growing 33% year over year. Analysts say nearly half of Azure’s growth now comes from AI workloads, marking a structural shift in enterprise cloud spending. Its Intelligent Cloud segment generated $26.8 billion in revenue, up 21%.

Server products revenue also jumped 22% as businesses raced to build AI infrastructure. The upbeat tone from Microsoft’s leadership on the earnings call reassured investors about sustained momentum.

Wedbush Securities lauded the results as an “Aaron Judge-like performance,” raising its price target from $475 to $515 and declaring the data center pullback fears “put to rest.”

Office, Dynamics Show Steady Strength

Beyond cloud, Microsoft’s Productivity and Business Processes division posted solid 10% growth, with revenue reaching $29.9 billion. Microsoft 365 Commercial revenue climbed 11%, and Dynamics 365 rose 16%, showing enterprise customers are ramping up digital transformation efforts.

Consumer revenue streams also held firm, with Microsoft 365 consumer up 10% and overall Dynamics revenue higher by 11%.

Capex Spending Reaffirmed, AI Boom Rolls On

Microsoft’s CFO Amy Hood stressed that rising demand — AI and otherwise — is converting heavy capital outlays into revenue faster than expected. The company reaffirmed its aggressive $80 billion FY25 capex plan and signaled that infrastructure investments will continue into FY26.

Piper Sandler analysts believe the AI and cloud tailwinds will help offset Microsoft’s massive capex bills, setting up for durable growth.

Conclusion

Microsoft’s latest results crushed expectations and reignited investor enthusiasm, with Azure’s 33% growth leading the charge. With cloud and AI momentum still accelerating, and capex concerns fading, MSFT looks poised for more upside. The stock’s surge, backed by raised price targets and bullish sentiment, cements Microsoft’s position as the dominant AI infrastructure player heading into the back half of 2025.

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