Microsoft earnings beat expectations, driven by video game sales and cloud demand

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Microsoft says it has benefited from accelerated adoption of digital capabilities such as cloud computing and Teams during the pandemic, even months into the crisis.

$37.2 billion in revenue for the three months ending in September, well above Wall Street analysts' prediction of $35.8 billion.

"The next decade of economic performance for every business will be defined by the speed of their digital transformation," Nadella said on a call with analysts Tuesday."This cloud shift and WFH dynamic looks here to stay and the company stands to be a major beneficiary of this trend," Wedbush analyst Dan Ives said in a note to investors Tuesday.

Some analysts, however, argue this slowing growth is to be expected given the large size of the business. Nadella said Tuesday he expects tech spending to double over the next 10 years."Gaming is one of the largest and fastest-growing forms of entertainment in the world. We expect there to be more than $200 billion of revenue in this industry in 2021," Kyle Vikstrom, Microsoft's director of investor relations, told CNN Business.

"We're seeing a really great early response to the console that's going to launch next quarter," Vikstrom said.

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