The company beat analyst estimates on earnings and revenue, reporting adjusted earnings per share of $2.48 and $51.73 billion in revenue for the fiscal second quarter.
Microsoft has seen continued strong growth in its cloud services business, reporting 46% revenue growth for the segment. That comes after four quarters at or above 50% revenue growth in the sector.
While the deceleration may have initially concerned investors, with shares falling right after the report, the stock turned positive in after-hours trading Tuesday after executives provided guidance. Finance chief Amy Hood said Microsoft expects Azure will see sequential growth acceleration in constant currency in the current quarter.
“MSFT posted another strong quarter, and while the sequential deceleration in Azure growth created initial noise in the print, these concerns were quickly allayed with management’s guide of a Q/Q acceleration in Azure CC growth,” Stifel analysts wrote in a note on Wednesday.
The tech sector has recently experienced a broad selloff amid concerns about rising interest rates. As of Wednesday morning, Microsoft and other Big Tech peers like Apple and Amazon had the most positive point impact on the Nasdaq 100.
“After the 14% YTD sell-off that appears overdone, we recommend growth investors buy MSFT on favorable risk-reward,” Piper Sandler analysts wrote.
-CNBC’s Jordan Novet contributed to this report.