Microsoft’s Q3 results exceeded Wall Street’s revenue and profit expectations, but the market responded negatively due to concerns about the sustainability of recent growth and the company’s heavy investment in AI infrastructure. Management attributed the quarter’s outperformance to strong adoption of AI-powered products, including its Copilot suite and Azure AI services, as well as robust commercial bookings growth. CEO Satya Nadella highlighted, “We are seeing increasing demand and diffusion of our AI platform and family of Copilots, which is fueling our investments across both capital and talent.”

Is now the time to buy MSFT? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are 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

• Keith Weiss (Morgan Stanley) questioned the risk of future disruption from rapid AI advances or AGI. CEO Satya Nadella responded that Microsoft’s approach relies on organizing multi-agent systems to “smooth out jagged intelligence,” and said he does not expect AGI to be achieved soon.

• Brent Thill (Jefferies) asked about the breadth and diversity of the commercial bookings surge. CFO Amy Hood explained that the RPO balance is distributed across products and customer segments, with most contracts having short durations and reflecting real-world usage.

• Mark Moerdler (Bernstein Research) raised the risk of overbuilding AI infrastructure and whether current demand justifies the investment. Hood stated that short-lived asset investments match contract durations, and demand signals justify aggressive spending on both GPUs and data center space.

• Mark Murphy (JPMorgan) probed the risk of large contractual commitments by smaller AI-native customers. Nadella replied that Microsoft’s diverse customer mix and fungible infrastructure reduce concentration risk, while Hood added that lead times for delivery provide risk mitigation.

• Brad Zelnick (Deutsche Bank) asked about the revenue impact of Azure’s capacity shortages. Hood said it is difficult to quantify but confirmed Azure bears most of the impact, as priority is given to Microsoft’s own applications and high-value workloads.

Catalysts in Upcoming Quarters

Looking ahead, our analyst team will closely monitor (1) the pace at which Microsoft alleviates Azure’s capacity constraints and brings new AI infrastructure online; (2) sustained adoption and monetization of Copilot across enterprise and consumer segments; and (3) diversification of commercial bookings, especially as large contracts with AI-native firms become a bigger part of the company’s backlog. Execution on infrastructure scaling and customer mix will be central to Microsoft’s growth trajectory.

Microsoft currently trades at $512.58, down from $542.66 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

The Best Stocks for High-Quality Investors

Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.

Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.