Microsoft delivered a strong Q3 2025, surpassing Wall Street’s expectations with $70.1 billion in revenue and $25.8 billion in net income, a 13% and 18% year-over-year increase, respectively. The cloud is the clear star of the show, with Microsoft Cloud revenue reaching $42.4 billion, a 20% jump. While specific AI revenue figures weren’t disclosed, the cloud division’s growth suggests a significant contribution from AI initiatives.
Despite economic headwinds, Windows OEM and devices revenue saw a 3% increase, driven by upgrades ahead of Windows 10 end-of-life. However, concerns about tariffs moderated the growth.
Gaming presents a mixed picture. Xbox hardware sales declined by 6%, but overall gaming revenue grew by 5%, fueled by Xbox content, services, and a growing Game Pass subscriber base (last reported at 34 million in February 2024). CEO Satya Nadella emphasized their leading position in preorders and preinstalls on both Xbox and PlayStation, bolstered by their strategy of bringing Xbox exclusives to PlayStation and Nintendo Switch platforms.
Microsoft’s Office and cloud offerings remain powerful engines. Microsoft 365 commercial revenue rose 11%, with consumer subscriptions reaching 87.7 million. Recent price increases related to AI-powered features in Microsoft 365 are contributing to revenue per user growth.
The “intelligent cloud” division led the way with a 21% surge, reaching $26.8 billion. Server products and cloud services revenues jumped 22%, with Azure growth at 33%.