Microsoft reported fiscal third-quarter results that beat market expectations, but its shares fell 1 percent, CNBC reported on Tuesday.

Microsoft posted revenue of $82.89 billion for its fiscal third quarter ended March 31. That was up 18 percent from a year earlier. Net income rose to $31.78 billion from $25.82 billion a year earlier. Both revenue and net income topped market estimates.

Cloud business drove performance. Revenue from cloud services including Azure surged 40 percent. Intelligent Cloud segment revenue, which includes Azure, server products, GitHub and Nuance cloud services, was $34.68 billion, above the market estimate of $34.27 billion.

Revenue in the productivity and business processes segment, which includes Office, LinkedIn and Dynamics, rose 17 percent to $35.01 billion. The number of seats for 365 Copilot, which adds AI to commercial Office subscriptions, surpassed 20 million. That was up from 15 million in January.

Revenue in the personal computing segment, which includes Windows, Xbox, Surface and Bing search advertising, fell 1 percent to $13.19 billion. Windows license sales also fell 2 percent. IT market research firm Gartner estimated that PC shipments rose 4 percent over the same period.

Quarterly capital spending and finance leases combined rose 49 percent to $31.9 billion. That was below the analyst estimate of $34.9 billion. Annualised AI total revenue was $37.0 billion, up 123 percent.