Microsoft (MSFT) stock soared over 6% following the company’s fiscal fourth-quarter earnings release, which exceeded Wall Street expectations on both revenue and profit. This robust performance was driven by exceptional growth in its cloud segment and expanding AI investments, solidifying Microsoft’s position as a dominant force in the tech industry.
Microsoft Q4 Results Beat Estimates
In Q4, Microsoft posted earnings per share (EPS) of $3.65 on revenue of $76.4 billion, surpassing analyst expectations of $3.37 EPS and $73.89 billion in revenue. Compared to the same quarter last year, this marks a significant increase from $2.95 EPS and $64.72 billion in revenue — clear indicators of accelerating growth.
The crown jewel of Microsoft’s financial performance was its Intelligent Cloud segment, which includes Azure. This division brought in $29.8 billion, beating the estimated $29.09 billion. CEO Satya Nadella attributed this success to surging demand for AI and cloud solutions, stating, “Cloud and AI is the driving force of business transformation across every industry and sector.”
MSFT Stock Soars on AI and Cloud Momentum
The MSFT stock reacted positively, climbing more than 6% in after-hours trading following the earnings call. This movement reflects investor confidence in Microsoft’s strategic direction and ability to monetize AI-driven innovations. Analysts predict continued momentum, especially with Azure surpassing $75 billion in annual revenue, a 34% year-over-year increase.
With the additional $10 billion Microsoft is pouring into AI infrastructure — raising its total to $85 billion this year — the company is preparing for long-term growth. While AI use cases are already gaining traction in FY25, many analysts believe fiscal 2026 will be the real inflection point for Microsoft’s AI-driven profitability.
Microsoft Stock Outlook: The AI Race Is On
Microsoft’s early bet on AI through its investment in OpenAI — the creator of ChatGPT — has given it a first-mover advantage. Its Copilot software, powered by generative AI, is being integrated across Microsoft 365, GitHub, and other productivity platforms. Analysts at BofA Global Research note this could be Microsoft’s next major revenue driver.
However, the relationship with OpenAI remains complex. The companies are currently navigating disagreements about OpenAI’s corporate structure and how much equity Microsoft will retain as OpenAI transitions into a public benefit corporation. Despite these uncertainties, investors remain bullish on the Microsoft stock, betting on long-term AI gains.
Market Reactions and Competitive Landscape
Microsoft’s Q4 earnings arrive just one week after Google (GOOG, GOOGL) also posted better-than-expected results driven by cloud revenue. The rivalry between tech giants in AI and cloud computing continues to heat up, but MSFT stock seems to be pulling ahead due to Microsoft’s integrated strategy and aggressive AI investments.
According to Wedbush analyst Dan Ives, “It’s clear FY26 for Microsoft remains the true inflection year of AI growth,” suggesting even greater upside potential for the MSFT stock in the long term.
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