Microsoft Corp Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Keith Weiss - Morgan Stanley - Analyst : Congratulations on a fantastic quarter. And what all of us are looking at as a difficult environment, a lot of uncertainty out there. So really impressive to put up the results that you guys did. One of the things that we heard a lot about this quarter in the media and press reports was changing data center commitments, maybe Microsoft walking away from some of those data center commitments. But it sounds like the AI demand is very strong. You're talking about not being able to hit all of that demand with the supply. So can you talk to us about what's going on with your data center strategy? Are there any shifts taking place. And maybe in particular, Satya, you could talk about some of the comments that you had made about the potential risk for oversupplies and GPUs out in the future. What exactly was that risk you were talking about? And are you incorporating that risk into your data center strategy?

Question: Brent Thill - Jefferies LLC - Analyst : Satya, on your comment about accelerating demand for cloud migrations. I'm curious if you could dig in and extrapolate a little more what you're seeing there.

Question: Mark Moerdler - Bernstein Research - Analyst : I will reiterate what my peers have said. Congratulations on the great quarter. Satya and Amy, Microsoft is a very different business than it was during the last recession. Incredible job you've done. If we get into a recession, I hope we don't, how do you think about the stability the sustainability, revenue volatility of Microsoft today if we were to get into a recession. Would the business react early to a recession or late, would you insist to have a more shallow impact on revenue? Any thoughts would be appreciated.

Question: Karl Keirstead - UBS - Analyst : A number of metrics to applaud, but I think the one that stands out to me is the 16 point growth rate lift to Azure from AI. Satya and Amy, I just wanted to ask if you could unpack that a little bit. Of course, you mentioned that you got a bit of a kicker from capacity coming online, but I'm a little bit more interested in where the demand came in above expectations, like what workload type. It's hard for us to see that on the outside. Was it a surge in ChatGPT inference that landed in Azure? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 9:30PM, MSFT.OQ - Q3 2025 Microsoft Corp Earnings Call Was it an uptick in enterprise AI adoption? And Amy, do you think that 16 points could be higher in June?

Question: Kash Rangan - Goldman Sachs - Analyst : One question for Amy. You've said in the past that that you can attain better and better capital efficiency with the cloud business and probably cloud and AI business. Where do you stand today, Amy and maybe Satya you can opine as well, that you've said before that you can slow down

Question: Mark Murphy - JP Morgan - Analyst : Satya, you had commented recently that the DeepSeek moment is a real thing. And you had said that software efficiencies mean that the fleet will be aged for a longer time. Can you comment on how those advances are affecting the pace and volume of AI experimentation and activity in the marketplace. And Amy, could we start to consider the possibility that software enhancements might extend the useful life assumption that you're using for GPUs? Is it a little premature to be thinking that way?

Question: Kirk Materne - Evercore ISI - Analyst : Congrats on a great quarter. Amy, you mentioned that the upside on Azure came from the non-AI services this time around. I was wondering if you could just talk a little bit more about that. And I guess as you look forward, maybe what's different this go around versus what we saw a few years ago when obviously, things like optimization weighed on the growth a little bit. It sounds like the product portfolio is much broader right now. But just wondering if you could add some color on that front.

Question: Alex Zukin - Wolfe Research - Analyst : And again, just amazing congratulations on those Azure numbers, which I think are quite honestly, just inspiring. So maybe, Amy, to the point that you're making that the surprise factor was on the non-Azure, non-AI side of the house, and it sounds like there's confidence in that continuing beyond. How much of that are you starting to see the pull in of the non-AI driven by the AI portion of Azure. And on the AI portion specifically, as test time compute really just blows out kind of prior conceptions of scaling law challenges, how much does that change potentially the curve of the AI Azure growth as you go forward here over the next few quarters?