Microsoft reports strong FY25 Q3 earnings driven by cloud and AI growth

On Wednesday, Microsoft reported its 2025 Q3 earnings on Wednesday, surpassing Wall Street’s expectations. The company made $70.1 billion in revenue, a 13% increase year-over-year. The reported net income stands at $25.8 billion, up 18% from the previous year.​

Microsoft Q3 2025 earnings call highlights

One of the major contributors to the massive Q3 earnings jump for 2025 was what Microsoft calls the intelligent cloud segment, which generated $42.4 billion in revenue, a 20-year year-over-year growth. Azure, Microsoft’s cloud platform, saw a 33% increase in revenue, thanks to high demand for AI services. 

Like last year, the company’s Office and cloud businesses are once again the stars of the show in the Q3 earnings call. Commercial and consumer revenues saw a jump of 11% and 10%, respectively, with consumer subscriptions reaching 87.7 million. 

Revenue from Windows OEM and devices rose by 3%, supported by PC upgrades ahead of Windows 10’s end-of-life and sustained inventory levels amid tariff uncertainties.

Also read: Microsoft’s CEO says AI has written 20% to 30% of the company’s code

Overall gaming revenue increased, but Xbox hardware saw a decline

Speaking of the gaming division, Microsoft reported a decline of 6 % in the Xbox hardware revenue. However, overall gaming revenue increased by 5%, driven by an 8% rise in Xbox content and services. On top of that, Microsoft’s Q3 earnings report also revealed a 45% spike in PC Game Pass revenue. 

It’s worth noting that cloud gaming also hit a record of over 150 million hours played. Microsoft continued expanding Xbox titles to PlayStation and Nintendo Switch, seeing preorder success.​ Moreover, Microsoft projects total revenue of $73.7 billion for the June-ending quarter, exceeding analyst estimates.