Microsoft witnessed its stock surge following the release of its latest quarterly results that came in ahead of expectations and were boosted by strong growth in its Azure cloud business. The cloud and computing giant did admit to a slowdown in business as the quarter came to an end, which resulted in a mixed outlook for the rest of its fiscal year.

Microsoft reported that overall revenues increased nearly 15% year-over-year to $35 billion during its most recent third fiscal quarter of 2020. Its Intelligent Cloud business, which includes Azure public cloud, Windows Server, SQL Server, and GitHub, was the biggest component of its overall business posting a 27% year-over-year segment increase to $12.3 billion. And more specific to its Azure business, Microsoft said revenues from that unit surged 61% year over year, which was the steepest increase across its reported business units.

Microsoft CFO Amy Hood said that growth was “ahead of expectations” and “driven by continued customer demand for our hybrid offerings.” And specific to Azure, she added that segment was “driven by continued strong growth in our consumption-based business.”

The growth helped boost Microsoft’s stock more than 3% after the earnings were released.

Google earlier this week reported a 52% year-over-year increase in its cloud revenues to $2.78 billion for its most recent quarter. The company said that it managed to escape its latest reporting period largely unscathed by the COVID-19 outbreak, though it warned that its current operating quarter will be “a difficult one."

Microsoft struck a similar tone, noting that the ongoing virus outbreak had a “minimal net impact on the total company revenue,” though it did start to see some slowdown in transactional licensing during the final weeks of the quarter. This was noted for its “small and medium business, and a reduction in advertising spend in LinkedIn.”

It also noted that cloud usage had increased during the quarter, particularly with its remote platforms like its Teams, Azure, and Windows Virtual Desktop services. And that its gaming business “benefited from increased engagement following stay-at-home guidelines.”

Microsoft CEO Satya Nadella succinctly noted that Microsoft has “seen 2 years' worth of digital transformation in two months.” Highlighting that point, Microsoft late last month reported that it had seen up to a 775% increase in use of some of its cloud services tied to the COVID-19 outbreak.

Hood also noted that while Microsoft’s China-based supply chain “returned to more normal operations at a faster pace than we had anticipated” the company was still capacity constrained at points during the quarter.

She linked the supply chain issues to data center disruptions that were reported during the quarter. Hood explained that the company’s $3.9 billion in capex for the quarter was lower than expected due to the lack of gear availability “in particular, on the server side in terms of getting what we need into the data centers. Things got a lot better in March, and they're continuing to get better,” Hood added.

Looking ahead, Hood said that Microsoft’s overall business could see a slight slowdown in revenue growth due to a broader drop in spending by heavily impacted market segments, though Nadella countered that Microsoft’s broad operations should moderate that impact.

“Microsoft's not immune from what's happening broadly in the world in terms of GDP growth,” Nadella told investors. “But at the same time, if there is going to be economic activity then I would claim that digital as a component of that economic activity is going to increase. And specifically, the full stack we have from infrastructure to our SaaS applications are going to be very competitive in that context.”

Nadella also touted Microsoft’s push toward the edge in bolstering its cloud business. Specifically he cited Microsoft’s recent acquisition of Affirmed Networks, which is focused on the 5G ecosystem, and the launch of its Azure Edge Zones platform that are designed to embed compute, storage, and networking resources at the edge of carriers’ 5G networks.

“So, it's not just about migrating off-premise, but it's going to be able to have an architecture that supports the needs, where edge compute is increasingly going to be very important,” Nadella said during the call.