Microsoft (MSFT) Stock Rallies on Strong Earnings and Lower Capex

TLDR

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Microsoft stock surged 8.4% in premarket trading after the fiscal fourth-quarter earnings beat.
Quarterly revenue increased 18% year-over-year to $90.01 billion.
Adjusted earnings reached $4.74 per share, above the $4.24 estimate.
Azure revenue grew 43% in constant currency, beating market forecasts.
Annual Azure revenue exceeded $100 billion for the first time.

Microsoft (MSFT) shares rose 8.4% in premarket trading after the company reported stronger fiscal fourth-quarter results. Growth in Azure, higher software demand, and improved guidance supported the sharp move.

Microsoft Corporation, MSFT

The company reported quarterly revenue of $90.01 billion, up 18% from a year earlier. The total exceeded analysts’ forecast of $87.62 billion. Adjusted earnings reached $4.74 per share, above the $4.24 market estimate.

Microsoft Stock Rises After Earnings Beat

Microsoft stock traded at $423.21 after the earnings release. The rally outpaced gains across the major US indexes during the same session. The S&P 500 gained 0.5%, while the Nasdaq rose 0.8%. The Dow advanced 0.4%. Microsoft recovered part of its earlier losses after trading below its 52-week high of $555.45 for much of 2026. The company also returned $10.2 billion to investors through dividends and share buybacks. These payments continued Microsoft’s regular capital return program.

Azure revenue increased 43% in constant currency during the quarter. The result exceeded analyst expectations of about 40% growth and marked Azure’s fastest expansion since early 2022.

Azure also generated more than $100 billion in annual revenue for the first time. The cloud platform remains a major source of Microsoft’s sales growth as companies increase spending on data services and artificial intelligence tools.

Microsoft expects Azure revenue to grow 45% in constant currency during the first quarter of fiscal 2027. Analysts had projected growth of 41.4%. Commercial remaining performance obligations rose 84% from a year earlier to $678 billion. This figure represents contracted revenue that Microsoft expects to record in future periods.

Copilot Demand Supports Software Business

Paid Microsoft 365 Copilot seats passed 30 million during the quarter. The total increased from 20 million only three months earlier as businesses adopted more AI-based workplace tools. Microsoft has added Copilot features across its productivity, cloud, and development products. The seat growth shows that more business customers are paying for these services.

The company also lowered its calendar 2026 capital spending forecast to $175 billion from $190 billion. Microsoft still plans to invest in data centres, chips, and cloud capacity, but the revised target reduced concerns about unlimited AI spending. Microsoft’s results arrived during a mixed market session. The Federal Reserve kept its benchmark interest rate at 3.50% to 3.75% on July 29.

Three policymakers supported a rate increase. The 30-year US Treasury yield also reached a 19-year high, while higher oil prices and chip-sector losses pressured stocks in the previous session.

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