Sources: 
Microsoft's financial report for the third quarter showed strong earnings, with
EPS of $4.27 and revenue of
$82.89 billion, surpassing Wall Street's expectations of
$4.04 EPS on
$81.46 billion revenue.
The significant growth in
AI business revenue, which has reached a
$37 billion annual run rate, reflects a remarkable
123% year-over-year increase. The company's Copilot service, which exceeded
20 million paid seats, played a crucial role in driving these numbers.
Despite the strong earnings results, Microsoft shares saw a
5.3% drop after the Q3 report, with investor concerns surrounding
rising capital expenditures projected at
$190 billion for the year, significantly higher than the
$154.6 billion consensus.
CFO Hood indicated that capital expenditure would rise by
61% from 2025, which may affect
operating margins, expected to decline to
44% in the next quarter from the previous
46.3%.
As of now, Microsoft's stock is down
12% in 2026, marking its worst quarterly performance since 2008, and has underperformed the S&P 500 by roughly
3.68 percentage points.
Sources: Microsoft reported its Q3 results, surpassing earnings expectations with a 123% year-over-year increase in its AI business, yielding a $37 billion annual revenue run rate. Despite strong financial performance, its stock slid 5.3%, raising concerns over rising capital expenditure forecasts.
