Microsoft Corp. delivered a strong earnings and revenue beat, grew its operating income and forecast another solid beat for the coming quarter, sending its shares up more than 8% in late trading today.

The company reported net income for the third quarter of $18.3 billion, up 9% from a year earlier. Revenue for the period rose 7%, to $52.86 billion, beating Wall Street’s forecast of $51.02 billion. Meanwhile, Microsoft’s earnings before certain costs such as stock compensation came to $2.45 per share, well ahead of the analysts forecast of $2.23 per share.

Looking to the company’s fiscal fourth quarter, Microsoft Chief Financial Officer Amy Hood said she sees revenue of between $54.85 billion and $55.85 billion, implying growth of 6.7%. Wall Street is looking for fourth-quarter revenue of $54.84 billion.

In a conference call, Microsoft officials told analysts that they’re extremely confident over the prospects of their recent bets on artificial intelligence. During the quarter just gone, Microsoft announced a new multibillion-dollar investment in OpenAI LP, the creator of the ChatGPT chatbot that has taken the internet by storm. Among other things, the company is planning to create a new, AI-powered version of Bing to enhance search experiences. It’s also going to enhance productivity software like Microsoft Office with ChatGPT’s capabilities.

“We feel we have a good lead and we have a differentiated offering up and down the stack,” said Microsoft Chief Executive Satya Nadella (pictured).

Hood revealed on the call that the company’s latest AI offerings have received lots of positive feedback. “We’re excited about the early demand signals from the AI capabilities we’ve announced to date,” she said. “We will continue to invest in our cloud infrastructure, particularly AI-related spend, as we scale to the growing demand driven by customer transformation. And we expect the resulting revenue to grow over time.”

The enthusiasm around AI has boosted Microsoft at a time when its traditional business segments are coming under pressure amid an uncertain economic climate. With many economists still warning of the possibility of a global recession, Microsoft’s Windows business has been hampered by falling personal computer sales. Meanwhile, its two cloud businesses — infrastructure and software — are still growing, but not as quickly as they were before, as enterprises across industries look to scale back on their technology investments where possible.

Still, Microsoft managed to beat expectations in all of its major business segments nonetheless. For example, revenue from the Intelligent Cloud business unit, which includes the Azure cloud infrastructure business, Enterprise Services, Windows Server and SQL Server, came to $22.08 billion, up 16% from a year ago and above the analyst forecast of $21.94 billion. Azure’s revenue and that of other cloud services grew by 27%, down from 31% in the previous quarter but in line with analysts’ forecasts.

Unlike Amazon Web Services Inc. and Google Cloud, Microsoft does not disclose profit numbers for the Azure cloud business. So there’s no way to know if the unit is profitable. AWS has been generating big profits ever since 2014, while Google today reported a first-ever operating profit for its Google Cloud unit.

Microsoft’s PC segment, which includes sales from Windows and Xbox consoles and games, delivered revenue of $13.26 billion, down from $14.52 billion a year earlier. Analysts had forecast just $12.18 billion, however.

According to the company, sales of Windows licenses to PC makers fell 28% from a year earlier because of higher channel inventories. The number is in line with a recent report from Gartner Inc., which estimated that PC sales declined by 30% in the quarter.

Last is the Productivity and Business Processes segment, which includes cloud software such as Office 365 and Teams, and the LinkedIn networking site. Revenue from the unit came to $17.52 billion, up slightly from $15.79 billion a year earlier. Once again, it surpassed expectations, with analysts forecasting revenue of $17.02 billion. The segment was helped somewhat by an increase in Office subscription prices that was implemented last year.

Collaboration also played a role in the segment’s revenue beat. On the call, Nadella said that the Teams communication app now has more than 300 million monthly active users, up from 280 million in the previous quarter.

Microsoft has benefited from playing a key role in changing the conversation around AI and its applications in enterprise software, said analyst Holger Mueller of Constellation Research Inc. “Strong interest in AI has helped to distract from the weakness seen in Microsoft’s Windows business, which is suffering like all hardware-related businesses are,” he said. “The question for investors is whether or not Microsoft can transform the buzz around AI into revenue growth for its software and Azure businesses. The next few quarters will be key and show us the true benefits of AI for Microsoft.”

The AI-fueled attention has boosted Microsoft’s share price throughout the year, as excitement builds around its significant investment in OpenAI. Microsoft’s stock is up more than 15% in the year to date, contrasting with the S&P 500 index’s overall gain of just 7.8%.

Shares of Amazon.com also rose almost 5% in extended trading, as Microsoft’s results suggest that the wider cloud computing market is doing better than first thought. Nvidia Corp.’s stock also made sharp gains today as Microsoft officials talked about their plans to ramp up spending on AI development.

Moreover, Microsoft’s confidence sparked investors to get more positive on other enterprise computing stocks, as the likes of Snowflake Inc., Datadog Inc., MongoDB Inc. and ServiceNow Inc., among others, rose as much 7% in after-hours trading.

Photo: Fortune Brainstorm TECH/Flickr