Microsoft stock surged 8% in after-hours trading on July 29 after the software giant reported fourth-quarter fiscal 2026 earnings that beat Wall Street expectations across revenue and profit, driven by accelerating cloud growth and artificial intelligence momentum.
The company reported adjusted earnings per share of $4.74 on revenue of $90.01 billion for the quarter ended June 30, surpassing analyst estimates of $4.24 per share on $87.62 billion in sales. The top-line beat marked a continuation of the company’s pattern of outperformance: Microsoft has now delivered 14 straight quarters of beating both earnings and revenue expectations, according to Benzinga.
Azure cloud computing revenue accelerated to 43% growth in constant currency, outpacing the consensus expectation of 40.4%. More significantly, Microsoft disclosed that Azure annual revenue surpassed $100 billion for the first time in fiscal year 2026, an 41% increase year-over-year. The Intelligent Cloud segment, which houses Azure, posted $39.31 billion in quarterly revenue, topping the $38.16 billion consensus forecast.
Microsoft’s AI business reached an annual revenue run rate of $37 billion, up 123% year-over-year, according to the company’s earnings release. The company also reported a $3.2 billion gain from its investment in AI lab Anthropic, which boosted the quarter’s results, though this was partially offset by a decline in the value of its OpenAI stake.
The earnings beat comes after a difficult year for MSFT stock, which has fallen 19% through Wednesday’s close as investors grappled with the company’s massive capital expenditure commitments for AI infrastructure. Microsoft reported capital expenditures of $41 billion in the June quarter and guided to over $50 billion in the September quarter. For fiscal 2026, the company maintained its prior guidance of roughly $175 billion in capital expenditures and finance leases, though it adjusted accounting methods to lengthen the useful life of data center buildings to 25 years from 15.
Chief Executive Satya Nadella emphasized the company’s positioning in the AI market, stating in the earnings release that Microsoft is “advancing the artificial intelligence frontier on the cost-to-outcome curve, ensuring every customer can turn tokens into business results.” The company noted that Microsoft 365 Copilot, its AI assistant for enterprise productivity software, has reached over 30 million paid seats, up from more than 20 million as of April.
For the fiscal first quarter beginning in September, Microsoft guided to revenue of $89.85 billion to $90.95 billion, with the midpoint of $90.4 billion implying 16.4% year-over-year growth and exceeding analyst expectations of $89.69 billion. The company projected Azure growth of 45% in constant currency for the current quarter, above the prior consensus of 41.4%.
Microsoft Cloud revenue, which encompasses Azure, Microsoft 365 commercial offerings, and other cloud services, rose 27% year-over-year to $59.3 billion. The segment’s commercial remaining performance obligations—a measure of contracted future revenue—jumped 84% to $678 billion, signaling strong demand momentum across the company’s portfolio.
The earnings report signals that Microsoft’s massive AI infrastructure investments are beginning to translate into measurable business returns, particularly in Azure. When Amazon reported Q2 earnings in late April 2026, its AWS cloud division grew revenue 19% year-over-year, slower than Azure’s current 43% pace, suggesting Microsoft’s cloud business is gaining ground in the competitive cloud market. The stock’s 8% surge in extended trading reflects investor relief that the company’s capex spending is yielding results.
Sources
- CNBC — Microsoft Q4 earnings results, revenue, EPS, Azure growth, capital expenditure guidance, and executive commentary
- Investor’s Business Daily — Microsoft Q4 earnings beat, stock price movement, cloud revenue growth, and fiscal Q1 guidance
- Benzinga — Microsoft’s 14 consecutive quarters of double beats
- Wall Street Journal — Azure annual revenue milestone and quarterly growth rates
- Yahoo Finance — Azure revenue targets and cloud segment performance
