The company reported $3.5 billion in capital expenditures, its highest level yet and up 66 percent year over year. In this division, Windows OEM revenue increased 4% and Windows commercial products and cloud services reported an increase in revenue of 21%.
Revenue at Microsoft's productivity and business processes unit, which includes Office 365, rose 17 per cent to US$9 billion, topping analysts' average expectation of US$8.73 billion, according to Thomson Reuters I/B/E/S.
Microsoft's intelligent cloud division saw revenue of $7.9 billion, an increase of 17%.
Operating income was $8.3 billion and increased 23%. Azure alone grew revenues by 93 per cent, which is a little down from the 98 per cent figure in the previous quarter. "We are innovating across key growth categories of infrastructure, AI (artificial intelligence), productivity, and business applications to deliver differentiated value to customers".
Microsoft's chief financial officer, Amy Hood, remarked that "with consistent investment and strong sales execution, this quarter we achieved better than expected performance across all segments".
Thanks in part to its colossal cloud business, Microsoft earnings are drenching shareholders in dollars.
Net income was $7.4 billion and increased 35%.
Wall Street has been modeling for the tech icon to earn 99 cents a share, up 1%, on sales of $27.92 billion, up 20%, in its fiscal fourth quarter.
The analyst expects that MSFT's More Personal Computing unit, which includes Windows, grew 5% in Q3 to $9.2 billion, amid stagnant growth in the PC market and a boost from corporate upgrades to 2015's Windows 10. Xbox gaming revenue grew by 24% thanks to third-party games titles.
Shares traded up about 0.3% at $94.50 in after-hours trading.
Microsoft shares, which are up nearly 40 per cent over the past year, rose slightly after closing 2.1 per cent higher at US$94.26.