Earnings came in 28% above what analysts expected.
And the company bumped its outlook higher - projecting full-year profit well above where it stood just three months ago.
The stock soared about 9% in after-hours trading.
The biggest driver behind the beat is a cost-cutting plan called Network 2.0.
It's FedEx's internal push to streamline its package operations using automation and AI.
The company originally targeted about $1 billion in savings from the effort. Now leadership says that number will come in even higher.
Operating profit hit $1.68 billion for the quarter - far above the $1.39 billion analysts had penciled in.
Bottom-line profit climbed to $1.06 billion, up from $909 million during the same stretch last year.
CEO Raj Subramaniam credited tight execution and the company's growing digital toolkit for the results.
FedEx is in the middle of one of the biggest AI training rollouts in corporate America.
Nearly all of its 440,000 workers are being put through a personalized learning program built with Accenture.
The program kicked off in early December and every employee gets training shaped around their actual job - whether they're loading trucks at a sorting hub or handling customs forms.
And the material refreshes on a monthly cycle.
Vishal Talwar, FedEx's top data and technology executive, said the entire leadership team flew out to Silicon Valley for two full days to evaluate potential tech partners.
"I have never seen an organization's full C-suite take off for two days just to learn," he said.
That kind of commitment from the top is unusual.
FedEx confirmed that its freight arm will become a standalone public company on June 1, right on schedule.
That move could surface value that's been hidden inside the larger business for years.
It also cleans up the FedEx story - giving investors a simpler way to price the core delivery operation by itself.
FedEx flagged "modest" disruptions from the Iran conflict but called the Middle East a small slice of total revenue.
The bigger question is whether the AI push starts showing up in the financials over the next few quarters.
So far, frontline workers are already chasing corporate roles at a higher clip since the training launched.
Investors are betting FedEx can keep trimming costs while still growing the top line.
But what actually comes next has investors looking towards the sky.
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