Shares of Microsoft (NASDAQ:MSFT) surged as much as 6% in extended trading on Tuesday following the release of the company’s third-quarter earnings. The software maker exceeded analysts’ expectations and gave a positive outlook for the fourth quarter. However, interestingly, MSFT stock is still down 7.45% in the last month.

Microsoft’s stock has been in decline so far this year. You can chalk that down to external factors because the tech giant is still as safe as a house. The company reported earnings which showed that revenue from their Intelligent Cloud segment increased, specifically revenue coming out of their Azure public cloud service. They also noted that revenue coming from SQL Server had grown significantly, and Windows Server is shaping up well.

The company’s Intelligent Cloud segment generated $19.05 billion in revenue, an increase of 26% from the previous year.

Microsoft’s CFO, Amy Hood, has just announced that its Q4 earnings will be between $52.4 billion and $53.2 billion, thanks to its positive outlook on all three of its major business segments.

Investors are showing lots of interest in Microsoft’s recent acquisition. The company is paying $68.7 billion to acquire video game publisher Activision Blizzard (NASDAQ:ATVI), the largest purchase in Microsoft’s 47 year history.

Microsoft has been acquiring several gaming companies lately, and in this case, it makes sense due to the growing popularity of gaming. The gaming market will grow to $268.8 billion annually by 2025. It’s set to increase even further in the coming years. Plus, Microsoft mentioned that the acquisition of Activision will help with its gaming business, in addition to helping provide building blocks for its own virtual world, the Microsoft Metaverse.

MSFT Stock Is a Buy After Earnings

Microsoft has been dominating the world of computing for decades. They started as a company that sold office software, but they have since moved on to selling cloud-based software. This has been Microsoft’s most significant pivot as a company, allowing them to see success in new markets.

Microsoft provides software through the cloud and owns office apps and enterprise software. In addition, they also own LinkedIn, Skype, and GitHub.

Microsoft has been one of the most profitable companies in the U.S. for many years. Its recent earnings reaffirm Microsoft’s position as one of the strongest tech giants in the industry.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.