Microsoft has reported better-than-expected third-quarter earnings, driven by strong growth in its cloud computing business. The company's revenue reached $65.6 billion, up 16% year-over-year, while net income increased 11% to $3.3 billion.

The strong performance was attributed to the increasing demand for cloud computing services, fueled by the growing adoption of artificial intelligence (AI). Microsoft's intelligent cloud division, which includes Azure, saw revenue grow by 20% to $24 billion, with AI services contributing 12% to that growth.

Microsoft's partnership with OpenAI, the creator of ChatGPT, has been instrumental in enhancing its AI capabilities across its product portfolio. CEO Satya Nadella stated that AI-related products are expected to contribute $10 billion to the company's annual revenue, making it the fastest-growing business in the company's history.

However, concerns remain about the sustainability of AI investments. Microsoft has projected a significant increase in capital expenditures to $80 billion in the 2025 fiscal year, fueled by AI-related investments.

Despite the strong quarterly results, Microsoft's stock price fell nearly 4% in after-hours trading, as investors expressed concerns about the company's ability to sustain its high growth rate in the future. Analysts have forecast that Microsoft's fourth-quarter earnings may fall short of market expectations.

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