The tech giant reported net income of $24.7 billion for the quarter ending September 30, marking an 11 percent increase from the same period last year. Earnings per share rose 10% to $3.30.

"AI-driven transformation is changing work...and workflow across every role, function, and business process," said Microsoft CEO Satya Nadella, adding that the company was winning new customers through its AI platforms and tools.

Microsoft has been at the forefront of the generative AI revolution, largely thanks to its partnership with OpenAI, the creator of ChatGPT.

The company has rolled out AI features at a furious pace, mainly under its Copilot brand, asking its cloud computing customers to upgrade to the new technology.

"Microsoft's latest earnings came in a bit above expectations, but the results may leave some investors wanting more clarity," said Emarketer senior director Jeremy Goldman.

"The true wildcard this quarter has been Microsoft's AI investments. It's pouring cash into building out infrastructure, with major capex implications. Yet, the revenue returns from AI remain more of a promise than a present reality," he added.

Azure, Microsoft's cloud computing platform, saw strong growth with revenue increasing 34 percent, when adjusted for currency fluctuations.

During the quarter, Microsoft also returned $9.0 billion to shareholders through dividends and share repurchases, helping pump up share value.

Microsoft's share price was up slightly in after-hours trading.

Google-parent Alphabet on Tuesday set the scene for a solid earnings season for big tech, as its cloud computing division posted strong results on the back of AI adoption by search engine users.