Microsoft Stock Breaks Higher as AI Spending Faces Its Next Test

TLDR

• Microsoft reported $90.0 billion in fiscal Q4 revenue, up 18% year over year and above analyst expectations.
• Azure growth accelerated to 43%, supporting continued demand for Microsoft’s cloud and AI computing services.
• Microsoft’s Productivity and Business Processes revenue rose 14%, showing steady demand across its software products.
• Quarterly capital spending reached $41 billion, while Microsoft expects more than $50 billion in capex for fiscal Q1 2027.
• Microsoft guided fiscal Q1 revenue to $89.85 billion–$90.95 billion, with Intelligent Cloud revenue expected to grow about 33%.

Microsoft (MSFT) stock remains supported after the company reported strong fiscal fourth-quarter results and issued steady guidance for the new year. Revenue reached $90.0 billion, up 18% from a year earlier, while constant-currency growth accelerated to 17%.

Microsoft Corporation, MSFT

The company also beat analyst revenue estimates by $2.38 billion. Growth remained strong in cloud and business software, while weaker personal computing results limited performance in one major segment.

Microsoft Stock Gains Support From Azure Growth

Microsoft’s Intelligent Cloud segment posted 31% constant-currency revenue growth in the quarter. Azure revenue growth accelerated to 43%, compared with a slower pace in the prior quarter.

Operating margin in Intelligent Cloud stayed broadly stable. Cost of revenue rose 42% as Microsoft continued spending on AI infrastructure, data centers, and computing capacity.

Productivity and Business Processes revenue rose 14% from a year earlier in reported and constant-currency terms. The pace improved slightly from the previous quarter, when constant-currency growth reached 13%.

Operating income growth remained close to revenue growth in the segment. The results showed that Microsoft continued to protect software pricing and profitability while expanding AI tools across its products.

CapEx Rises as Microsoft Expands AI Capacity

Microsoft reported $41 billion in capital spending for the quarter, up 69% from a year earlier. The company also expects capital spending above $50 billion in the first quarter of fiscal 2027.

Operating cash flow increased from a year earlier, while free cash flow reached $19.64 billion. Microsoft continues to fund data center expansion from internal cash generation without relying on new equity funding.

The company also plans to introduce its Maia 300 chip as early as next month. Microsoft has been discussing production capacity with TSMC as it works to reduce dependence on external chip suppliers.

For fiscal 2027 Q1, Microsoft expects revenue between $89.85 billion and $90.95 billion. The midpoint points to about 16% year-over-year growth despite a small currency headwind.

Intelligent Cloud revenue is expected between $40.95 billion and $41.25 billion. At the midpoint, that would represent about 33% growth from a year earlier.

Microsoft still faces risks from regulation, weaker personal computing demand, and possible GPU supply limits. However, current guidance, Azure demand, and stable software margins continue to support the Microsoft stock outlook after its recent rally for investors across the current market.

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