Microsoft Corp (Nasdaq: MSFT ) stock initially traded higher by less than 1 percent Thursday afternoon after the company reported earnings and revenue that beat expectations and delivered yet another quarter of impressive cloud services growth.

Microsoft reported fiscal third-quarter earnings per share of 95 cents and revenue of $26.8 billion. Both numbers topped consensus analyst estimates of 85 cents and $25.7 billion, respectively. Microsoft's revenue was up 16 percent from a year ago.

By segment, Microsoft's More Personal Computing revenue, which includes Windows, devices and gaming, was up 13 percent to $9.92 billion. Analysts had expected More Personal Computing revenue of $9.25 billion.

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Productivity and business processes revenue, which includes Office, LinkedIn and Dynamics, was up 16.8 percent to $9.01 billion. Analysts had expected $8.73 billion.

Microsoft Office 365 commercial subscriptions rose 28 percent. Office 365 subscriber count increased to 30.6 million, up from 29.2 million last quarter.

Revenue from Microsoft's all-important Intelligent Cloud segment, which includes Azure, was up 17 percent to $7.9 billion. As usual, Microsoft did not specifically disclose Azure revenue, but the company noted that it was up 93 percent from a year ago. Azure revenue soared 98 percent last quarter.

Commercial cloud gross margins increased to 57 percent from 55 percent the previous quarter.

"Our results this quarter reflect the trust people and organizations are placing in the Microsoft Cloud," CEO Satya Nadella says in a statement. "We are innovating across key growth categories of infrastructure, AI, productivity and business applications to deliver differentiated value to customers."

Bank of America analyst Kash Rangan recently says Azure will help drive Microsoft's free cash flow per share to $8.50 by 2023.

"Our long-term thesis is that the cloud business has an incremental tailwind of $10 billion to $15 billion in gross profits over the next three years," Rangan said.

"In our view, [MSFT] can earn $8 in EPS by 2025 driven by commercial cloud."

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Bank of America has a "buy" rating and $116 price target for MSFT stock.

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