Despite ongoing macroeconomic uncertainty, Microsoft (MSFT) has demonstrated its resilience and long-term growth potential with a strong fiscal third-quarter 2025 earnings report. The solid momentum in its financials was again led by the strength of its cloud business, which had substantial contributions from artificial intelligence (AI) services.

Enterprise customers continue to rely on Microsoft’s cloud and AI offerings to boost productivity and improve operational efficiency, and this trend will likely continue at least in the foreseeable future, driving Microsoft’s financials and share price.

With cloud adoption and AI integration continuing to accelerate, Microsoft appears well-positioned for sustained long-term growth, which will support its share price.

Investors reacted positively to MSFT’s earnings report, with Microsoft shares jumping about 9% in morning trading following the announcement. Although the stock hasn’t delivered significant gains in 2025, Street remains optimistic about its performance. Moreover, at least one Wall Street analyst is betting big, setting a Street-high price target of $600.

Microsoft’s Q3 Earnings: Cloud and AI Fuel Broad-Based Growth

The technology giant delivered revenue of $70.1 billion, up 13% year-over-year. Azure, Microsoft’s cloud computing platform, remains the key catalyst behind its growth. The company has been aggressively expanding its enterprise partnerships, embedding AI capabilities across its suite of services, and investing heavily in data center infrastructure. These strategic moves enhance the value of Microsoft’s offerings and strengthen its competitive positioning.

Microsoft Cloud continues to be the company’s primary growth driver. Cloud revenue totaled $42.4 billion in Q3, marking a 20% year-over-year increase. The Intelligent Cloud segment, which includes Azure, generated $26.8 billion in revenue, up 21% from a year ago. Notably, Azure and related services saw revenue growth of 33%, with AI services accounting for 16 percentage points of that gain.

The quarter witnessed strong commercial bookings, which rose 18%, driven in part by a significant Azure commitment from OpenAI. Microsoft is seeing healthy demand for its AI offerings and non-AI services, particularly from enterprise customers.

The Productivity and Business Processes segment posted $29.9 billion in revenue, up 10%. Commercial cloud revenue from M365 grew 12%, fueled by the rising adoption of premium offerings like M365 E5 and the AI-powered Copilot. Microsoft continues to expand its user base, especially among small to medium-sized businesses. Paid M365 commercial seats rose 7% year-over-year, now surpassing 430 million.

The Personal Computing segment showed resilience, generating $13.4 billion in revenue, up 6% from last year. Windows OEM and Devices revenue saw a modest growth of 3%. At the same time, Search and news advertising (excluding traffic acquisition costs) surged 21%. This was driven by stronger usage through third-party partnerships and growth in Microsoft's Edge browser and Bing search engine.

Microsoft's gaming business also posted growth, with revenue up 5%. Thanks to strong third-party and in-house game titles, Xbox content and services performed well, rising 8%.

MSFT Stock: Will It Hit $600 Soon?

Microsoft expects continued strength in its Intelligent Cloud segment, forecasting Q4 revenue between $28.75 billion and $29.05 billion, representing 20% to 22% growth in constant currency. Azure, again, will lead the way, with anticipated Q4 revenue growth of 34% to 35%. AI-related services will remain a key catalyst, supported by rising demand and Microsoft’s ongoing data center expansion.

The company’s infrastructure investments are keeping pace. In Q3, Microsoft opened data centers in 10 countries across four continents, doubling its capacity over the past three years. This aggressive expansion is helping meet growing AI and cloud demand. Its AI business has already reached a $13 billion annual revenue run rate, highlighting the explosive momentum in this space.

Despite concerns about a macroeconomic slowdown, Wall Street maintains a “Strong Buy” consensus on MSFT stock. The company’s strategic bets on cloud and AI are already paying off, and the runway for growth looks long. These trends indicate that MSFT stock still has room to run and perhaps even reach the $600 mark soon.