Microsoft’s third quarter saw positive market reaction as revenue and non-GAAP earnings per share surpassed Wall Street expectations. Management credited widespread adoption of its cloud and AI offerings—particularly Copilot and Foundry—for this performance, pointing to rapid growth in enterprise demand and expanded use cases across commercial and consumer segments. CEO Satya Nadella highlighted that “automated tasks have nearly doubled since July,” with customer momentum translating into larger Copilot deployments and higher usage-based revenue.
Is now the time to buy MSFT? Find out in our full research report (it’s free for active Edge members).
Microsoft (MSFT) Q3 CY2026 highlights:
- Revenue $92.28 billion vs S&P analysts’ estimates of $90.64 billion (1.8% beat)
- EPS (GAAP) $4.92 vs analyst estimates of $4.72 (4.3% beat)
- Gross margin 67.8%, down from 69% in the same quarter last year
- Operating margin 49.8%, in line with the same quarter last year
- Market capitalization $3.94 trillion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our top 5 analyst questions from Microsoft’s Q3 earnings call
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Adam Wood (Morgan Stanley) asked about the main drivers of long-term returns, focusing on infrastructure utilization versus monetizing more product layers. CEO Satya Nadella replied that margin improvements will come from both more efficient infrastructure and expanding monetization across products.
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Karl Keirstead (UBS) inquired about the drivers behind Azure’s projected growth. CFO Amy Hood explained that recent gains stem from engineering-driven efficiency, Foundry allocation, and higher token pricing, but noted variability in supply and usage-based pricing.
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Mark Moerdler (Bernstein Research) questioned the mix of enterprise versus digitally native AI workloads. Nadella emphasized growing breadth of enterprise adoption, with examples from sectors like manufacturing and finance, and noted that enterprise-scale workloads are becoming the norm.
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Brent Thill (Jefferies) asked if Microsoft can sustain high operating margins alongside rapid revenue growth. Hood responded that operational excellence, efficiency, and integrated product delivery are key to maintaining profitability.
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Brad Reback (Stifel) probed the speed of adoption for usage-based billing outside of coding. Nadella acknowledged it will be faster in developer tools, while enterprise productivity solutions will require more gradual customer education and sales efforts.
Catalysts in upcoming quarters
Looking ahead, the StockStory team will closely monitor (1) continued enterprise adoption and deployment scale of Copilot and Foundry, (2) incremental gains in cloud infrastructure efficiency and capacity expansion, and (3) the pace of migration from per-seat to usage-based billing across Microsoft’s product suite. Updates on customer demand for new AI models and supply chain progress for data center components will also be critical to watch.
Microsoft currently trades at $522.64, down from $529.85 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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