The stock gained 6 percent in after-hours trade, hitting levels above its 1999 all-time high of $59.97.
The company posted adjusted first-quarter earnings per share of 76 cents on revenue of $22.33 billion. Wall Street also expected Microsoft to report earnings of about 68 cents a share on $21.71 billion in revenue, according to a Thomson Reuters consensus estimate.
Microsoft also said it expects to finish its acquisition of LinkedIn and the sale of its entry-level feature phone business in the second quarter of fiscal 2017.
CFO Amy Hood said in a statement that the demand for Microsoft's cloud-based services was reflected in the company's first-quarter results.
Azure, Microsoft's major cloud offering, saw another stellar quarter as revenue grew 116 percent. For the fiscal first quarter, the entire intelligent cloud segment brought in $6.38 billion in revenue, better than a FactSet analyst consensus estimate of about $6.27 billion.
Pacific Crest Securities said that Microsoft's results were "impressive" as it saw a "significant uptick in the cloud gross margin to 49% from 42% last quarter." The firm said these numbers "reinforce [its] bullish stance on Microsoft's ability to become a key beneficiary of the shift to cloud and digital."
The company recently announced a partnership with Adobe in which the creator of Photoshop and Illustrator software packages named Microsoft Azure its "preferred cloud platform," while Microsoft said Adobe Cloud Marketing is its "preferred marketing service."
Microsoft CEO Satya Nadella said the agreement "will bring together the cloud horsepower and end-to-end capabilities brands need to design and deliver great digital experiences."
In late September, the company said it was on track to complete its $40 billion stock buyback by the end of the year. If Microsoft does repurchase the full amount and doesn't reissue any of those shares, it would be among the largest buybacks done in the past decade.
Disclosure: KeyBanc Capital Markets does and seeks to do business with companies covered in its research reports. Pacific Crest Securities is a division of KeyBanc.
— CNBC's Christopher Hayes contributed to this report.