Microsoft beat Wall Street estimates for third-quarter revenue and profit on Thursday, driven by gains from adoption of artificial intelligence across its cloud services, and the company's shares jumped more than 4 percent in extended trade.

Executives forecast ranges for current quarter cloud revenue that were mostly above Wall Street targets.

The rise in Microsoft shares after the bell lifted the company's stock market value by $128 billion as profit and revenue growth overshadowed its higher-than-expected capital expenditures. In contrast, Facebook and Instagram parent Meta's market capitalization fell by $200 billion on Wednesday after it warned of rising AI expenses and issued a lower-than-anticipated revenue forecast.

Microsoft revenue rose 17 percent to $61.9 billion in the quarter ended March, exceeding the consensus estimate of $60.80 billion, according to LSEG data. Earnings per share of $2.94 topped Wall Street's target of $2.82

"Microsoft’s AI-powered earnings demonstrate that doubling down on innovation is paying off," said Jeremy Goldman, senior director of briefings at Emarketer, pointing to the company's early moves in generative AI, such as its large investment in ChatGPT maker OpenAI.

Microsoft revenue rose 17 percent to $61.9 billion in the quarter ended March, exceeding the consensus estimate of $60.80 billion, according to LSEG data. Earnings per share of $2.94 topped Wall Street's target of $2.82.

At the same time, Microsoft's AI-driven capital expenditures in the third quarter were nearly $1 billion more than analysts' estimates. Capital expenditures grew from $11.5 billion in the previous quarter to $14 billion, passing estimates of $13.14 billion, according to Visible Alpha.

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"We're continuing to see customer demand grow quite a bit," Brett Iversen, Microsoft's vice-president of investor relations told Reuters. "And so we're making sure to scale our available capacity in line with that."

The stock has soared on Microsoft shipping generative AI (genAI) tools based on its strategic partnership with OpenAI and also helped it capture the world's most valuable company crown from Apple this year. 

Revenue from Microsoft's Intelligent Cloud unit, which houses the Azure cloud computing platform, rose to $26.7 billion, passing the average estimate of $26.24 billion, LSEG data showed

Microsoft has special access to OpenAI's coveted AI technologies, which it has been working to infuse across its product portfolio, such as in Azure, Bing and also Microsoft 365, which includes Word, Excel, and Powerpoint.

Revenue from Microsoft's Intelligent Cloud unit, which houses the Azure cloud computing platform, rose to $26.7 billion, passing the average estimate of $26.24 billion, LSEG data showed.

It forecast fourth quarter intelligent cloud revenue of $28.4-28.7 billion, mostly ahead of Wall Street targets of $28.47 billion.

Azure revenue rose 31 percent, higher than a 29 percent growth estimate from market research firm Visible Alpha. Microsoft forecast Azure growth in the fiscal fourth quarter would be 30-31 percent, which would put it ahead of the 28.5 percent Wall Street target.

Microsoft does not break out the absolute revenue figure for Azure, the part of its business best situated to capitalize on booming interest in artificial intelligence.

Azure revenue rose 31 percent, higher than a 29 percent growth estimate from market research firm Visible Alpha. Microsoft forecast Azure growth in the fiscal fourth quarter would be 30-31 percent, which would put it ahead of the 28.5 percent Wall Street target

The Copilot tool, a set of genAI assistants launched in November for $30 a month, has lifted Microsoft's enterprise software and Windows businesses. A recovery in personal computer sales was also a factor.

The More Personal Computing unit revenue increased 17 percent to $15.6 billion, surpassing analyst expectations of $15.08 billion, according to data from LSEG.

READ MORE: Microsoft hits $3 trillion market value, second to Apple

Productivity and Business Processes, Microsoft's unit that houses office software and LinkedIn, increased revenue 12 percent to $19.6 billion. Analysts had estimated $19.54 billion, according to data from LSEG.