Microsoft on Wednesday reported better-than-expected quarterly results and issued strong forecasts for its all-important Azure cloud division. However, the important debate over the stock price did not subside, and there was a lackluster response to extended trading. Here’s a look at some of Microsoft’s key metrics for fiscal 2026 third quarter versus Wall Street consensus. Revenue for the three months ended March rose 18% from a year earlier to $82.89 billion, beating LSEG’s consensus estimate of $81.39 billion. Earnings per share (EPS) increased 23.4% year over year to $4.27, beating the consensus of $4.06, according to LSEG. On a constant currency basis, Azure cloud revenue growth was 39%, compared to FactSet consensus of 38%. On a reported basis, Azure cloud revenue increased 40%, beating the FactSet consensus of 39%. MSFT 1Y Mountain Microsoft’s stock price performance over the past 12 months. Conclusion Let’s call this a step in the right direction. There were some positives, led by Azure’s growth guidance this quarter. But there were also reminders of why Microsoft became such a hotly contested stock in the first place, especially concerns about the viability of its highly profitable seat-based software business model. Considering all these puts and takes, it’s not surprising to see the stock swing between modest gains and losses in after-hours trading Wednesday night. Microsoft was beloved at the beginning of the generative AI boom thanks to its close relationship with OpenAI, the creator of ChatGPT. But that shine has faded, and Microsoft has become the worst-performing stock in the Magnificent Seven over the past six months. This tested the patience not only of us but also of many other long-time shareholders. The reason for the stock slump is that Microsoft’s reliance on OpenAI for Azure’s growth has come to be seen as a weakness rather than a weapon. At the same time, the market wondered if Microsoft would leave Azure to grow as it faced capacity constraints. Skepticism also grew about the quality of Microsoft’s AI assistant, Copilot, as rivals such as startup Anthropic received praise for their tools. Additionally, concerns about AI eating software are prevalent at Microsoft and its peers. Those arguments were not resolved Wednesday night, even as some clarity was gained. The good: Microsoft expects Azure growth to be between 39% and 40% for the three months ending in June. By comparison, the FactSet consensus is about 37%. Microsoft also signaled that it is ramping up capital spending to bring more AI computing power online. This should allow the company to meet demand from external customers while allocating resources to internal AI modeling research and reduce its reliance on OpenAI’s intellectual property over the long term. The relationship between Microsoft and OpenAI continues to evolve, and the distance between them is growing. Microsoft CFO Amy Hood said on an earnings call that the company expects to spend about $190 billion in capital expenditures in calendar 2026, implying almost $120 billion for the April to December period. This compares to approximately $118 billion for the entire 2025 calendar year, representing approximately 61% year-over-year growth. Another modest plus is that Copilot now has more than 20 million paid seats, up from 15 million disclosed in January. Hood said the company expects to see another sequential increase this quarter, with continued growth in average revenue per user. This isn’t to say that Microsoft doesn’t still have work to do to improve Copilot, but adoption is at least on the rise. So what about the bad points? There’s no getting away from the fact that Microsoft is still a software company that has thrived on selling seat-based licenses to customers. And in the age of AI, where companies may be downsizing and the remaining employees using large amounts of expensive AI computing, old ways of billing customers may need to evolve. In fact, a significant amount of time during Wednesday night’s conference call Q&A was spent discussing seat-based and pay-as-you-go models. CEO Satya Nadella has essentially been advocating for a hybrid solution, and time will tell if he’s right, but the very nature of the conversation reinforced some of the existential concerns investors currently have about software providers. We currently reiterate our Hold Equivalent 2 rating and $500 price target. Guidance Microsoft provides the following guidance for the fourth quarter of fiscal year 2026. Azure’s revenue growth (constant currency) is between 39% and 40%, comfortably beating the FactSet consensus of 36.9%. Total revenues ranged from $86.7 billion to $87.8 billion, representing growth of 13% to 15%. The midpoint of the guidance is slightly below the FactSet consensus of $87.56 billion. Operating expenses were $19.3 billion to $19.4 billion, representing 7% year-over-year growth. FactSet’s implied consensus was $19.78 billion. Capital investment will exceed $40 billion as more computing power comes online. Fourth quarter earnings forecasts by reportable segment are as follows: Productivity and business processes: $37 billion to $37.3 billion. This beats the FactSet consensus of $36.64 billion. Intelligent Cloud: $37.95 billion to $38.25 billion. By comparison, the FactSet consensus is $37.65 billion. Personal Computing Growth: $11.75 billion to $12.25 billion, below the FactSet consensus of $13.31 billion. (Jim Cramer’s Charitable Trust is long MSFT. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. 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