Key Points

• Earnings per share was $2.45, exceeding analysts' expected $2.23
• Revenue was $52.86 billion, surpassing the expected $51.02 billion
• Q4 revenue guidance of $54.85 billion to $55.85 billion

After the software company released fiscal third-quarter results and quarterly outlook that surpassed analysts' expectations, Microsoft shares increased 9% in extended trading on Tuesday.

Amy Hood, the vice president of finance at Microsoft, predicted $54.85 to $55.85 billion in sales for the fourth quarter of the current fiscal year. The median estimate, at $55.35 billion, is a 6.7% increase over the $54.84 billion consensus estimate of the analysts surveyed. In terms of AI, Hood is optimistic.

From $16.73 billion, or $2.22 per share, a year earlier, net income increased 9% to $18.3 billion, or $2.45 per share. According to a statement, revenue rose 7% to $52.86 billion from $49.36 billion last year.

The Azure public cloud, Enterprise Services, SQL Server, and Windows Server all fall within Microsoft's Intelligent Cloud business area, which produced $22.08 billion in revenue. This is a 16% increase over the analysts' consensus estimate of $21.94 billion.

Azure and other cloud service revenue increased by 27%, down from 31% in the previous quarter. The average growth forecast by CNBC's analysts was 26.5%, while analysts were expecting 27.2%.

Dynamics, LinkedIn, and Office are all parts of the Productivity and Business Process division, which reported $17.52 billion in sales, an increase of roughly 11% and more than the analyst's average of $17.05 billion. According to Microsoft, an increase in income per user enabled the corporation to generate 14% more money from commercial Office 365 productivity software subscriptions.

CEO Satya Nadella reported that the Teams collaboration software had more than 300 million active monthly users during the quarter. This is an increase from the 280 million in the prior quarter.

Bing, Windows, Surface, and Xbox were part of the More Personal Computing segment, which generated $13.26 billion in revenue, a 9% decline but more than the $12.25 billion analysts estimate. According to Nadella, Bing now has more than 100 million daily active users, and gaming subscription revenue has reached $1 billion.

Because of increasing channel inventory levels, sales of Windows operating-system licenses to device makers fell by about 28%. According to research firm Gartner, PC shipments decreased 30%. But according to Hood, the demand for PCs was a little more than the management had anticipated.

Microsoft claimed it will use OpenAI's artificial intelligence models for a new iteration of its Bing search engine and improvements to the Microsoft 365 productivity software when it announced a new multibillion-dollar investment in the firm during the quarter.

"We feel we have a good lead and have a differentiated offering up and down the stack," said Nadella.

Excluding the after-hours transaction, Microsoft shares have increased by 15% so far this year, compared to a 6% increase in the S&P 500 index during the same time.