Shares of Microsoft (MSFT 0.59%) charged sharply higher Wednesday morning, surging as much as 4.7%. As of 10:44 a.m. ET, the stock was still up 3.2%.

The catalyst that sent the tech giant higher was its quarterly financial results, which easily outpaced expectations driven by strong demand for its cloud computing services and an early win for its artificial intelligence (AI) services.

Here's why Wall Street loved Microsoft's results

For its fiscal 2024 first quarter (ended Sept. 30), Microsoft's revenue grew 13% year over year to $56.5 billion. The better-than-expected results also gave a significant boost to the bottom line, as diluted earnings per share (EPS) of $2.99 rose 27%. 

Investors breathed a sigh of relief, fearing Microsoft had been caught up in the AI hype cycle. To give those numbers context, analysts' consensus estimates had been calling for revenue of $51.4 billion and EPS of $2.50. The strength of the results caught investors off guard, given the continuing uncertainty in the economy.

In fact, each of Microsoft's major business segments outdid expectations, but the strongest performer was Azure Cloud, which grew 29% year over year, far better than Wall Street's expectations for growth of 26%. 

Microsoft CFO Amy Hood left no doubt as to what drove the blockbuster results, noting that Azure's revenue growth was fueled by "higher than expected AI consumption." 

Is Microsoft stock a buy?

Equally as important as the strong results was management's commentary, which suggested that there was much more where that came from. CEO Satya Nadella noted that Microsoft's AI-fueled Copilot productivity tools had already attracted more than 37,000 organizations and 1 million paid users, up 40% sequentially, which suggests Copilot is off to a strong start. That's even more impressive considering the breakout product is still limited to "early access" and won't be released for general availability for enterprise customers until next week. 

With that as a backdrop, Microsoft's outlook suggests additional acceleration is on the horizon. The company is guiding for revenue of roughly $60.9 billion, or growth of about 15% at the midpoint of its guidance. Wall Street had been forecasting revenue of $55.1 billion, so investors cheered the strength of Microsoft's forecast.

Given its continuing robust growth and strong prospects, Microsoft stock is a buy.