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Microsoft's shares soared more than 16% on Thursday, putting the company on track for a record one-day gain in market value after ​it said it expects to keep generating cash through its ‌new fiscal year and forecast cloud growth above Wall Street expectations.

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Microsoft eases AI fears… the market’s new AI split… Luke Lango’s Exit Ladder if the selling returns… what the Fed’s preferred inflation gauge just revealed… Well, Microsoft (MSFT) just saved the AI trade – at least for the moment.

Yesterday after the closing bell, the software giant reported earnings that easily cleared Wall Street’s expectations.

Quarterly revenue reached $90 billion, well ahead of the $87.6 billion analysts expected. Adjusted earnings of $4.74 per share topped the $4.24 consensus estimate.

More importantly for the AI trade, Microsoft’s Azure cloud business accelerated.

Azure revenue jumped 43%, compared with 40% growth in the prior quarter and roughly 40% expected by analysts. Microsoft also revealed that Azure generated more than $100 billion in annual revenue for the first time, while its Microsoft 365 Copilot product surpassed 30 million paid seats.

As for capex, Microsoft kept its calendar year 2026 forecast unchanged. But on the call, finance chief Amy Hood added that she expects capex to keep climbing in fiscal 2027, pointing to “demand signals across our portfolio.”

In other words, Microsoft isn’t merely spending heavily on AI infrastructure. It’s seeing strong, accelerating demand for it – and telling investors more spending is coming precisely because that demand justifies it.

As I write on Thursday, MSFT is soaring nearly 17%.

Meta (META) also reported last night – and told a different story Revenue rose 28% to a record $60.8 billion, edging past Wall Street’s $60.2 billion forecast. But earnings came in at $6.18 per share, well below the roughly $7.22 analysts expected – a 14% year-over-year decline in net income.

Part of that shortfall reflected one-time items: $2.4 billion of legal charges and $1.18 billion of severance costs tied to recent layoffs. But even stripping those out, expenses climbed 55% to $42 billion, badly outpacing revenue growth.

On the capex question, Meta’s spending continues to surge. The company spent $31.1 billion on capex during the quarter, up 83% from a year ago.

Looking ahead, it narrowed its 2026 capex forecast from $125 billion-$145 billion to $130 billion-$145 billion.

Technically, Meta didn’t raise the top end of its forecast. But by lifting the bottom end by $5 billion, management effectively told investors that spending is more likely to land toward the upper half of its previous range.

Shares are down more than 9% as I write.

The bottom line: Neither company is tapping the brakes on AI spending. But Wall Street decided one of them has proof the spending is working – and the other doesn’t, which accounts for the tale of two returns today.

Returning to Microsoft, did it just save the AI trade? As I write on Thursday, the AI trade is soaring – a welcome rally after weeks of relentless selling pressure.

Coming into today, the Nasdaq was down about 10% from its record high set roughly two months ago, while chip stocks, as measured by the iShares Semiconductor ETF (SOXX), had collapsed by nearly 30%.

While multiple fears contributed to the bloodbath, the primary concern was that the tech giants were burning cash on AI infrastructure with no near-term return. That was bad for the hyperscalers, but also for the wider AI trade, as the fear was that, eventually, the lack of returns for the hyperscalers would force them to cut their spending, meaning less revenue for AI infrastructure companies.

Microsoft eased those fears last night.

As for capex, Microsoft reported $41 billion in property investments, including finance leases, which fell below the $42 billion figure Wall Street feared.

And on the return side, Azure’s full-year revenue soared past the $100 billion milestone for the first time. This gave Wall Street exactly what it needed – definitive evidence of commercial monetization from corporate AI transformations…which is also proof that the need for the broader AI infrastructure trade still exists.

On that note, SOXX is soaring almost 9% today as I write.

But here’s a critical note for your portfolio…

This morning is evidence of a new split within AI. Investors are punishing companies with abstract AI ambitions – like Meta – but aggressively rewarding foundational platforms showing immediate utilization and software margins – like Microsoft.

So, “show me the money” is the new reality in AI.

After the closing bell today – likely by the time you read this – Amazon (AMZN) will report earnings and update its capex guidance. We’ll see whether it adds to today’s AI comeback or throws cold water on it.

Now, in case “cold water” is the outcome, our technology expert has you covered…

How to protect your portfolio if today’s rally is just temporary relief While AI stocks are surging today, after five straight weeks of grinding selling, one good morning doesn’t erase the possibility that the pain comes back.

Our technology expert Luke Lango has a plan for such an outcome.

Two semiconductor benchmarks – SOXX and the VanEck Semiconductor ETF (SMH) – both broke below their 50-day and 100-day moving averages earlier this week after weeks of steady selling.

Luke says the market has been pricing in a full basket of fears at once: hyperscaler capex peaking, open-source models commoditizing premium AI tools, circular financing arrangements in the AI supply chain, a possible re-escalation in Iran, and the chance that Fed Chair Kevin Warsh will hike rates rather than hold.

If those fears turn into a fresh wave of selling pressure, AI investors need a game plan – and that’s what Luke just provided to his Innovation Investor subscribers:

We are introducing a pre-defined, rules-based Exit Ladder as insurance against our fundamental bull thesis — four tranches of 25% each keyed to Fibonacci retracement levels, the 200-day moving average, and major prior support shelves on SMH and SOXX — not a forecast, but a hedge to protect open gains if the bounce never comes.

In other words, this is a pre-committed plan for reducing AI infrastructure exposure if the selling returns, decided in advance and executed without emotion.

Now, as I write, both SMH and SOXX are well above Tranche 1 (SMH $480-490 / SOXX $440-465). So, nothing has triggered.

If this bounce holds, the ladder simply goes unused – insurance nobody needed. But if the bears return, the plan is already in place.

The important takeaway: planning Most investors approach a moment like this by trying to guess right – will this tech bounce continue? Will the U.S/Iran reach a permanent ceasefire? Will Warsh be able to prevent the Fed from raising rates this fall?

But having to guess correctly is a terrible foundation for a plan – it only works until the one time you guess wrong, and that one time is usually the one that costs you the most.

What seasoned investors like Luke do instead is separate the decision from the outcome. They decide in advance what would prove them wrong, and what they’ll do about it if that happens – before that moment has arrived and is clouding their judgment.

That’s the entire point of something like the Exit Ladder.

It’s not a prediction that stocks will fall further, any more than a smoke detector is a prediction that your house will burn down. It’s a decision made in a levelheaded moment about what action gets taken in an uncalm one.

And once that decision exists on paper, the only thing left to do is check the actual price against the actual trigger – no second-guessing, no hoping, no talking yourself into “just one more day.”

Define the risk before you’re in it, and by the time you’re in it, there’s nothing left to decide.

If you’d prefer to create and follow your own Exit Ladder instead of using Luke’s, that’s great. Just know what you’re doing, when, and why.

If you’re an Innovation Investor subscriber, click here to login and get all the details. And to learn about joining Luke in Innovation Investor, click here.

By the way, this afternoon, Luke went live, explaining why he thinks the biggest fortunes of the AI boom may not come from buying the household names everyone already knows – even the ones soaring today.

He detailed why he believes there’s another side to the AI story that many investors have overlooked. But it’s one that has the potential to generate returns that dwarf even some of AI’s highest fliers today.

If you missed his presentation, click here to catch a free replay.

What today’s inflation data told us Let’s not overlook the June Personal Consumption Expenditures (PCE) that dropped this morning.

The headline number fell 0.1% in June, putting the 12-month headline rate at 3.7%, down from May’s 4.1%. Core PCE, which strips out food and energy, rose 0.1% for the month and now sits at a 3.3% annual rate.

Both readings still sit well above the Fed’s 2% target. But regular Digest readers know that headline and core PCE aren’t the numbers Fed Chair Kevin Warsh is watching.

As we’ve covered here in the Digest, Warsh has made clear he sees the standard PCE gauge as little more than a “rough guess” at real price pressure, since a single energy shock can ripple through the data and get mistaken for broad inflation.

His preferred measure is the “trimmed mean PCE” from the Dallas Fed. It throws out the most extreme price movers at both ends each month and averages the rest. It’s designed to show the inflation that’s actually sticking, not the noise from oil spikes or one-off shocks.

So, what did the trimmed mean show today? It eased.

The 12-month trimmed mean came in at 2.2% in June, down from 2.4% in May and its lowest reading of the past six months. The one-month annualized figure cooled even more sharply, dropping to 1.4% after May’s 2.7% reading.

That’s notable, because it means the gap between core PCE (3.3%) and the trimmed mean (2.2%) – already wide – got even wider this month.

If you’re in Warsh’s camp, that gap is exactly the point: strip out the noise, and the underlying inflation trend looks a lot closer to the Fed’s target than the headline numbers suggest.

As I noted yesterday, if you think a rate hike in September is a lock, make sure you’re factoring this data into your assessment.

We’ll keep you updated on all these stories here in the Digest. For now, enjoy the rally.

Have a good evening,

Jeff Remsburg

(Disclosure: I own MSFT, AMZN, SMH.)

New York, New York--(Newsfile Corp. - July 30, 2026) - Bronstein, Gewirtz & Grossman, LLC, a nationally recognized investor-rights law firm, announces that a class action lawsuit has been filed against Microsoft Corporation (NASDAQ: MSFT) and certain of its officers.

This lawsuit seeks to recover damages against Defendants for alleged violations of the federal securities laws on behalf of all persons and entities that purchased or otherwise acquired Microsoft securities between May 1, 2025 and January 28, 2026, both dates inclusive (the "Class Period"). Such investors are encouraged to join this case by visiting the firm's site: bgandg.com/MSFT.

Microsoft Case Details

The Complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements because they failed to disclose that:

Microsoft's Copilot family of products had experienced significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems; Microsoft's flagship proprietary AI model ranked well below competitors on a number of benchmark tests; Microsoft needed to increase by billions of dollars its capital expenditures and divert graphics processing unit ("GPU") and central processing unit ("CPU") capacity away from fulfilling demand for its profitable Azure services in order to improve the competitive positioning of its critical Copilot family of products and increase its AI-related research and development ("R&D"); and as a result of the above, Microsoft had failed to convert a significant percentage of its commercial Microsoft 365 users to paid Copilot subscriptions and Microsoft's Copilot offerings had lost market share to rival products, a trend that was increasing.What's Next for Microsoft Investors?

A class action lawsuit has already been filed. If you wish to review a copy of the Complaint, you can visit the firm's site: bgandg.com/MSFT, or you may contact Peretz Bronstein, Esq. or his Client Relations Manager, Nathan Miller, of Bronstein, Gewirtz & Grossman, LLC at 917-590-0911. If you suffered a loss in Microsoft you have until August 11, 2026, to request that the Court appoint you as lead plaintiff. Your ability to share in any recovery doesn't require that you serve as lead plaintiff.

No Cost to Microsoft Investors

We, Bronstein, Gewirtz & Grossman LLC, represent investors in class actions on a contingency fee basis. That means we will ask the court to reimburse us for out-of-pocket expenses and attorneys' fees, usually a percentage of the total recovery, only if we are successful.

Why Bronstein, Gewirtz & Grossman, LLC for Microsoft Securities Class Action?

Bronstein, Gewirtz & Grossman, LLC is a nationally recognized firm that represents investors in securities fraud class actions and shareholder derivative suits. Our firm has recovered hundreds of millions of dollars for investors nationwide. More at www.bgandg.com

"Our practice centers on restoring investor capital and ensuring corporate accountability, which serves to uphold the essential integrity of the marketplace," said Peretz Bronstein, Founding Partner of Bronstein, Gewirtz & Grossman, LLC.

Follow us for updates on LinkedIn, X, Facebook, or Instagram.

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Prior results do not guarantee similar outcomes.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/301535

Source: Bronstein, Gewirtz & Grossman, LLC

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Microsoft Corp (NASDAQ:MSFT) shares surged almost 17% on Thursday morning, putting the stock on track for its best single-day performance in nearly 18 years.

Investors and analysts alike cheered earnings showed accelerating Azure growth and a sharp inflection in Copilot adoption.

The company reported fourth-quarter revenue of $90.01 billion and earnings per share of $4.74, both ahead of expectations. Azure revenue rose 43% year-over-year, beating consensus of roughly 40%, while paid Copilot seats climbed past 30 million after net additions more than doubled sequentially.

Management guided to Azure growth of about 45% for the first quarter of fiscal 2027, well above the Street's roughly 41% estimate.

Analysts at Bank of America called the results "increasing validation of Microsoft's AI strategy," noting revenue grew 17% in constant currency against a Street forecast of 14.8%.

Remaining performance obligations rose $51 billion quarter-over-quarter to $678 billion, with BofA noting all of that growth came from customers outside the frontier-model cohort, a sign of broadening AI demand. The firm said about 30% of RPO is expected to convert to revenue over the next 12 months, up from 25% last quarter, with existing RPO covering 57% of Street revenue estimates for the next year and 88% over the following 15 months.

Jefferies called it "a slam dunk," pointing to Azure's best beat in three quarters, doubled Copilot net adds and an accelerating Microsoft 365 business, and contrasted the quarter with Meta Platforms, which it said is still building toward visible AI returns without similar cloud deal momentum.

Microsoft 365 Commercial Cloud grew 14% in constant currency and is guided to 15% next quarter, with further acceleration expected through fiscal 2027. Commercial RPO was up 84% year-over-year.

Jefferies flagged that AI demand still exceeds supply despite Microsoft adding another gigawatt of data center capacity in the quarter, and said fiscal 2027 operating margin compression should be less than a percentage point, better than feared.

Kathleen Brooks, research director at XTB, said Microsoft's results were "more warmly received" than other big tech reports this season, pointing to a $3.2 billion return on its Anthropic investment and lower-than-expected early retirement programme costs that helped preserve profitability.

Brooks noted Azure cloud revenue topped $100 billion for fiscal 2026 for the first time, making it larger than Google Cloud, with $40 billion generated in the quarter alone.

Capital expenditure reached $41 billion, up more than 60% year-over-year, which BofA called in line with expectations, adding that fiscal 2026 capex guidance was unchanged after adjusting for a lease accounting change.

Free cash flow fell 23% to $19.64 billion, a figure Brooks said the market can absorb far more comfortably than Meta's.

Microsoft returned $10.2 billion to shareholders in the quarter, including $6.8 billion in dividends and $3.4 billion in buybacks.

by Todd Bishop on Jul 30, 2026 at 10:14 amJuly 30, 2026 at 10:17 am

The first thing I do when Microsoft’s 10-K or 10-Q comes out is hit Ctrl-F and go waaaay down to the section called “Revenue, classified by significant product and service offerings.” It’s on Page 85 of the 10-K that came out Wednesday with its quarterly and annual results.

From my perspective, this gives the clearest view of what’s actually happening in Microsoft’s business. It groups things into categories and product names that match a real-world understanding of the company, as opposed to the mumbo jumbo you have to decode otherwise.

Microsoft reports its results in three broad segments: Productivity and Business Processes, Intelligent Cloud, More Personal Computing. Businesses like Azure, Xbox, Windows and LinkedIn all basically disappear inside them, until you dig into the filing.

The table, as it appears in Microsoft’s 10K for FY2026. Overall, for the fiscal year ended June 30, Microsoft’s revenue increased 18%, or $50.1 billion, to $331.8 billion. Here is what the 10-K table shows about the real drivers of the business.

Two business lines are driving nearly all of Microsoft’s growth.

Of the $50.1 billion in revenue that Microsoft added for the fiscal year, $31 billion came from Server products and cloud services, accounting for 62% of the company’s growth.

This category includes Azure, along with SQL Server, Windows Server, Visual Studio, GitHub and Nuance. Microsoft doesn’t detail Azure revenue in its financial statements, but CEO Satya Nadella said on the earnings call that Azure passed $100 billion in annual revenue for the first time this year.

At total revenue of $129.4 billion, this is by far Microsoft’s biggest business, accounting for nearly 40% of its annual revenue.

The second biggest growth came from Microsoft 365 Commercial, which added $14.2 billion in revenue, up 16% to $102 billion. Microsoft 365 Commercial covers the business subscriptions: Office, Teams, SharePoint, Exchange, security and compliance, and Microsoft 365 Copilot.

Taken together these two business lines produced 90% of Microsoft’s growth for the year.

They’re also where the company is monetizing AI most successfully: Azure, AI infrastructure and GitHub Copilot in server and cloud; and Microsoft 365 Copilot in Microsoft 365 Commercial.

Two of Microsoft’s longtime businesses got smaller.

Windows and Devices revenue fell $230 million, to $17.1 billion. Once the biggest growth engine for the company as a whole, the PC operating system business has been flat for the past four years, using the categories as Microsoft now defines them. Xbox revenue fell $1.7 billion, to $21.8 billion. That’s the first annual decline since Microsoft completed its $69 billion Activision Blizzard acquisition. It comes as Microsoft overhauls the business, cuts jobs and takes a write-down on unspecified Xbox assets. Other notes and observations from the table:

LinkedIn, at $19.8 billion, now generates more revenue than Windows and Devices. It passed Windows in fiscal 2025 and extended the lead this year, growing 11% while Windows declined. Microsoft 365 Consumer was the fastest-growing category after server products, up 24% to $9.2 billion. Search advertising grew 9% to $15.2 billion, and is closing in on Windows and Devices. Dynamics grew 15% to $9 billion. Enterprise and partner services, the consulting business, grew 6% to $8.3 billion. Thoughts? Let me know on LinkedIn. Here’s our coverage of the earnings.

• Microsoft stock is charging ahead with explosive momentum. What’s behind MSFT gains?

Throughout the call, CEO Satya Nadella emphasized that Microsoft’s AI strategy is increasingly built around model choice rather than dependence on any single AI provider. Instead of betting exclusively on OpenAI, Microsoft is building a platform where customers can mix and match models based on cost, performance and use case.

Microsoft Is Building a Multi-Model AI PlatformWhile OpenAI remains one of Microsoft’s closest AI partners, Nadella said Azure now offers customers broad model choice.

“We offer the broadest model catalog in the cloud with over 11,000 models, including the latest from OpenAI, Anthropic, Mistral, xAI, as well as our own MAI family,” he said.

Microsoft said customer adoption is accelerating. Nadella said the company has seen “5x increase in the number of customers building with models from multiple providers.”

He cited Levi Strauss & Co. (NYSE:LEVI), which is using both OpenAI and Anthropic models through Microsoft’s Foundry platform while deploying more than 1,000 domain-specific AI agents.

‘Every Model Is Substitutable’The clearest signal came when Nadella explained how Microsoft is designing its AI platform.

“We are building a new model system where the harness, context, memory, and action space are separate from any one model family.” He said the approach improves more than just efficiency. “It also has the added benefit of business continuity and resilience because every model is substitutable.”

The theme carried into the analyst Q&A. CFO Amy Hood said Microsoft is intentionally separating the software layer from the underlying model so enterprises can switch providers over time.

“You’ve got to keep your harness separate from the model… That means any given model at any given time is swappable,” Hood said.

Nadella reinforced the point moments later, arguing enterprises shouldn’t become dependent on a single AI provider. “The biggest thing that we should take away from that is you can’t depend on any one model,” he said.

Why It Matters For InvestorsFor years, Microsoft’s AI narrative has been closely tied to OpenAI. This earnings call suggested the company’s competitive advantage increasingly lies elsewhere: becoming the infrastructure layer that can host OpenAI, Anthropic, xAI, Mistral and Microsoft’s own MAI models side by side.

That strategy appears to be resonating. Azure revenue grew 43% year over year during the quarter, while Microsoft said customers are increasingly adopting multi-model AI architectures. Microsoft Cloud revenue reached $214.4 billion for the fiscal year, and commercial remaining performance obligations climbed to $678 billion, underscoring continued enterprise demand for the company’s AI platform.

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Gabriela Borges, Goldman Sachs managing director and senior software equity research analyst, joins Bloomberg after raising her price target on Microsoft, saying the software giant is showing stronger signs that its AI investments are translating into revenue. She discusses Azure growth, improving adoption of Copilot, Microsoft's AI strategy, and why she believes investors are only beginning to appreciate the company's progress.

Microsoft Corporation NASDAQ: MSFT reported its fourth-quarter earnings for its 2026 fiscal year (FY2026). Investors liked what they heard, pushing MSFT up over 16% in midday trading after the report.

Microsoft Today

$455.32 +64.78 (+16.59%)

As of 03:10 PM Eastern

This is a fair market value price provided by Massive. Learn more.

52-Week Range$349.20▼

$555.45Dividend Yield0.80%

P/E Ratio27.10

Price Target$558.64

For once, good news is good news. The two biggest takeaways from the report were the strong growth in the company’s Azure business (i.e., cloud computing) and its capital expenditures (CapEx), which struck a balance of commitment, restraint, and a return on that investment.

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The response after the report must be a relief to buy-and-hold shareholders who have suffered through a steep drop in MSFT since October 2025. Early signals from analysts suggest that this may be the start of a broader rally.

However, it’s important to look at the bigger story behind the rally. This wasn’t just about a beat-and-raise quarter. MSFT had been punished by a bearish narrative focused on artificial intelligence spending without payoff. This report changed that.

Azure Growth Tops Expectations and Raises the Bar AgainIt’s important not to gloss over the sequential growth in Microsoft’s cloud business. The 43% growth beat analyst estimates of around 41%. That 41% was already a high bar, given the 40% sequential growth the company delivered in the prior quarter.

More impressively, Microsoft is guiding for 45% growth in Azure in Q1 of FY2027. The significance of that number becomes evident in the company’s CapEx guidance.

Commercial bookings and backlogs tell the same story from a different angle. Remaining performance obligation (RPO) hit $678 billion, up 84% year over year. Even stripping out OpenAI commitments, RPO still grew 25%. That shows that Microsoft is converting demand into contracted, multi-year revenue.

Copilot adoption crossed 30 million paid seats in Microsoft 365, a scale milestone bulls have been waiting on. It's the clearest evidence yet that AI monetization is moving from pilot programs to paycheck-line-item status for enterprise customers.

Microsoft's CapEx Spending Finally Looks SustainableIf Microsoft is growing its cloud business at approximately 40%, it had to post a CapEx number showing that all the growth wasn’t being consumed by its infrastructure spend.

In the quarter, Microsoft spent $41 billion on CapEx. That was in line with its prior guidance. It also projected CapEx spending for FY2027 at around $175 billion. That coincides with the $190 billion it forecasts to spend in calendar year 2026.

It wasn’t exactly like threading a needle; a better analogy might be that Microsoft is forecasting a Goldilocks level of spending (not too hot, not too cold), backed by AI-related revenue.

This is the psychological pivot point for the stock. Investors spent nine months punishing Microsoft for accelerating CapEx spending without evidence of return. But the skepticism is fading away as analysts see revenue growth outrunning the spending growth

Strong Cash Flow Supports Microsoft's AI Investment StrategyInvestors were also closely focused on the company’s free cash flow (FCF). In Q3 FY2027, Microsoft reported negative FCF, largely due to CapEx. This quarter’s $19.6 billion was 23% lower year over year. However, it was still positive. Furthermore, the company says it will be FCF positive for all of FY2027.

Operating cash flow rose 30% to $55.4 billion, the figure that matters most for a company still self-funding a historic infrastructure buildout. Microsoft also returned $10.2 billion to shareholders through dividends and buybacks, a signal it isn't sacrificing capital returns for AI spending.

Microsoft Stock Breaks Above Key Technical LevelsThe chart backs up the fundamental story. MSFT gapped up from the open in a 16% single-day move. That represented a decisive break above both the 50-day SMA ($398.52) and the 200-day SMA ($433.85).

Reclaiming the 200-day moving average after a seven-month downtrend is a meaningful technical signal on its own. It suggests the long-term trend may be turning back up, not just bouncing on one good print.

A move this sharp will likely leave short-term momentum indicators like RSI in overbought territory. Traders should expect some consolidation or pullback risk in the near term, even if the longer-term trend has shifted bullish.

Analysts See More Upside for Microsoft StockMicrosoft Stock Forecast Today12-Month Stock Price Forecast:
$557.98
21.90% Upside

Moderate Buy
Based on 48 Analyst Ratings

Current Price$457.74High Forecast$870.00Average Forecast$557.98Low Forecast$400.00Microsoft Stock Forecast Details

The Microsoft analyst forecasts on MarketBeat show several analysts raised their price targets on MSFT following the report. The first several price targets came in below the consensus price target of $557.98. But even at the consensus, the stock would be trading at a new all-time high.

That gap between individual targets and the consensus is itself a tell. Analysts are still catching up to a stock that just erased months of skepticism in a single session. Expect more upward revisions in the days ahead as models get updated for the beat.

Microsoft had a strong quarter that is finally being recognized as such. In this hypersensitive market, the company will have to keep showing the return on its AI investment for the rally to continue through the rest of the year. But for now, the narrative around MSFT has changed, and that’s welcome news for shareholders.

Should You Invest $1,000 in Microsoft Right Now?Before you consider Microsoft, you'll want to hear this.

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The company never disclosed OpenAI‘s backlog outright. Instead, Hood told analysts that commercial RPO “increased 25% when excluding OpenAI.” Combined with Microsoft’s prior-year disclosures, that comment offers investors a way to estimate just how significant the ChatGPT maker has become to Microsoft’s future revenue pipeline.

If the estimate is directionally correct, it means roughly one out of every three dollars in Microsoft’s contracted commercial revenue pipeline is tied to a single customer. That’s an unusually high level of concentration for a company of Microsoft’s size, even as the company works to diversify its AI business.

The Math Behind Microsoft’s OpenAI ExposureMicrosoft reported commercial RPO of $368 billion at the end of fiscal 2025. If that backlog grew 25% excluding OpenAI, as Hood said, Microsoft’s commercial RPO without its AI partner would now stand at roughly $460 billion.

That leaves an implied $218 billion difference between Microsoft’s reported $678 billion backlog and the estimated $460 billion excluding OpenAI. In other words, OpenAI-related commitments could represent about 32% of Microsoft’s commercial backlog.

This assumes OpenAI was a negligible part of the backlog a year ago. If it wasn’t, the non-OpenAI base would be smaller—making OpenAI’s share bigger than 32%, not smaller. Either way, one-third is a floor.

Microsoft did not disclose OpenAI’s backlog or say one-third of its RPO belongs to the company. The figure is an estimate derived from Microsoft’s reported RPO and Hood’s disclosure about growth excluding OpenAI. Still, it highlights the extraordinary scale of Microsoft’s commercial relationship with its biggest AI partner.

Microsoft Is Diversifying Beyond OpenAIThe disclosure came as Microsoft spent much of the earnings call emphasizing that its AI strategy extends well beyond OpenAI.

CEO Satya Nadella said Azure now offers more than 11,000 AI models, including offerings from OpenAI, Anthropic, Mistral, xAI and Microsoft’s own MAI family. He also said the number of customers building applications with models from multiple providers has increased fivefold since the start of the year, underscoring Microsoft’s push toward a model-agnostic AI platform.

Even so, OpenAI remains a major growth engine. Hood also said commercial bookings increased 18% year over year excluding OpenAI, while commercial RPO grew 25% on the same basis, illustrating the outsized contribution the AI startup continues to make.

Why It Matters For InvestorsMicrosoft has increasingly positioned Azure as the infrastructure layer for the broader AI ecosystem rather than a platform tied to any single model provider. But the company’s latest disclosures suggest OpenAI remains one of the most strategically important customers in its history.

While the implied $218 billion figure is based on investor calculations rather than a company disclosure, it offers a fresh perspective on the scale of Microsoft’s AI partnership—and why investors continue to watch that relationship as closely as Azure’s headline growth.

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Goldman Sachs is leaning bullish on memory pricing, arguing that the shortage story still has room to run. The firm expects conventional DRAM prices to rise at a solid double-digit pace in both Q3 and Q4, helped by tight supply and sustained AI-related demand.

The bigger upside may be in HBM. Goldman says HBM pricing could potentially double next year as conventional DRAM prices move higher, with Samsung Electronics’ HBM pricing projected to climb 87% year over year versus the 52% increase Wall Street currently expects.

This article will be updated throughout the day, so check back often for more daily updates. 

On the heels of the Federal Reserve’s decision to keep interest rates unchanged for now, stocks are moving higher. The latest economic data gave investors a mixed message: growth is slowing, but inflation is still not where the Fed wants it. Q2 GDP rose 1.5%, short of the 1.8% economists expected and down from 2.1% in Q1, suggesting the economy lost some momentum as spring turned into summer.

On the inflation side, the Fed’s preferred PCE gauge cooled 0.1% in June, but the annual rate still stood at 3.7%, well above the central bank’s 2% target. Core PCE, which strips out food and energy and is watched closely for trend inflation, rose 0.1% on the month and 3.3% from a year ago. Stock futures stayed positive, but Treasury yields moved sharply higher, suggesting traders are not ready to declare the inflation fight over.

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Here’s a look at where things stand as of pre-morning trading:

Dow Futures: 51,968 Up 0.39%
Nasdaq 100 Futures: 27,810 Up 1.71%
S&P Futures: 7,398 Up 0.64%

Market Movers Microsoft (Nasdaq: MSFT) delivered the kind of megacap beat the market needed, with EPS of $4.74 and revenue of $90.1 billion both clearing expectations. The report gives the AI trade a steadier anchor after a rough stretch for semiconductors.

Meta Platform’s (Nasdaq: META) quarter put the AI spending debate back under the microscope. Revenue guidance missed expectations at the midpoint, while free cash flow dropped 91% year over year to $784 million as the company kept pouring money into AI. Shares fell in pre-market trading and remain down about 16% this year.

Amazon’s (Nasdaq: AMZN) Zoox unit moved closer to a commercial robotaxi rollout after receiving a temporary NHTSA exemption for as many as 2,500 vehicles annually in the U.S. over the next two years, according to Bloomberg. The green light gives Amazon a new autonomy milestone as investors watch whether Zoox can become more than an expensive side bet.

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today.

Contact [email protected] for any questions or corrections.

© 1st footage / Shutterstock.com

Microsoft's FQ4 showed that the AI CapEx story is beginning to look more like future operating leverage than endless margin pressure. Intelligent Cloud revenue moved closer to catching up with COGS growth, while CapEx productivity held up better than expected. Incremental gross margin remains the missing piece, meaning the full cloud margin inflection has not arrived yet.

Microsoft stock is surging after its latest earnings report eased investor fears about its AI spending and revenue growth.

Microsoft (MSFT) shares jumped about 7% on Thursday morning after the software company reported fiscal fourth-quarter results that topped Wall Street estimates

Microsoft (MSFT +16.56%) stock is up 13% today on the strength of quarterly earnings that saw revenue increase 18% and cloud computing revenue exceed $100 billion for the first time.

But I believe the most significant number in Microsoft’s fiscal fourth-quarter earnings report is $19.6 billion -- the free cash flow the company generated despite its massive capital expenditures on AI infrastructure.

While some AI companies such as Tesla and Alphabet faltered after their earnings reports this month, Microsoft appears to be in a much stronger position. Here’s why.

Image source: The Motley Fool.

First, a look at Microsoft’s quarterMicrosoft had strong numbers across the board in its fiscal fourth quarter of 2026 (ending June 30). Revenue was $90 billion, up from $76.4 billion a year ago, and net income was $35.76 billion, an increase of 31% from the same period. Microsoft’s earnings per share came in at $4.81 versus $3.86 in fiscal Q4 2025.

For the full year, revenue was $331.8 billion, up 18% from fiscal 2025, and net income of $133.7 billion was up 31% from a year ago. Full-year EPS was $17.95 versus $13.64 in 2025.

Microsoft recorded year-over-year revenue gains in nearly every segment this quarter, with only Windows and Xbox lagging.

Segment Percentage Y/Y Change Microsoft Cloud Revenue 27% Commercial Remaining Performance Obligation 84% Microsoft 365 Commercial Cloud Revenue 14% Microsoft Consumer Cloud Revenue 24% LinkedIn Revenue 12% Dynamics 365 Revenue 13% Azure and Other Cloud Services Revenue 43% Windows OEM and Devices Revenue (7)% Xbox Content and Services Revenue (10)% Search Advertising Revenue Excluding Traffic Acquisition Costs 10% Source: Microsoft

“We are advancing the frontier on the cost-to-outcome curve, ensuring every customer can turn tokens into business results," CEO Satya Nadella said. “This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation.”

Why Microsoft stands out from the crowdFrom a revenue perspective, Microsoft had a solid report. But so did Alphabet, which reported revenue up 24% to $119.8 billion, and Tesla, which reported revenue of $28.2 billion, up 26% from a year ago.

The problem for both those companies was their expanding capex and sagging cash flow. Alphabet announced an increase in its projected capex for this year from $185 billion to $200 billion, and reported free cash flow of negative $5.9 billion. Alphabet stock fell 6% on the heels of the report.

Tesla fared even worse. Elon Musk’s company reported a free cash flow of negative $1.1 billion, announced it would spend $25 billion in capex this year, and would borrow up to $30 billion. Tesla stock cratered, falling 18% over a week, marking its worst performance since 2022.

But Microsoft is a different story. Free cash flow fell 23%, but still registered a strong $19.6 billion. And CFO Amy Hood told analysts on the company’s earnings call that Microsoft expected to remain free cash flow positive in fiscal 2027 as well.

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Microsoft also differs in that it didn’t increase its capex plans. The company previously had announced it would spend as much as $190 billion this calendar year on capex; Hood announced in the earnings call that the company’s guidance remains unchanged, but because of an accounting change, the budget item is now $175 billion -- some data center leases are shifting from finance leases to operating leases, which aren’t included in capex.

Just as important, Microsoft indicated it was ready to be flexible with its capex -- particularly as the supply of GPUs, CPUs, storage, and memory products remains tight. “If the demand environment changes, you just slow down what is, in fact, the largest component, and the driver of (cost of goods sold),” Hood said. “… You can stagger the timing of the build-out.”

That kind of thinking is important, as markets have proven sensitive to AI spending right now.

Why I think Microsoft is a good buy nowMicrosoft still has huge plans to spend on AI, and it’s not backing off from its long-term plans. But this quarter’s earnings report indicates that it can fund its AI investments while still generating billions in free cash flow. That’s a feat that eluded both Tesla and Alphabet.

As investors increasingly focus on how big tech companies fund their AI build-outs, Microsoft’s financial position sets it apart.

At first glance, the $15 billion decline looks like a signal that AI infrastructure spending is finally cooling. It is not.

MSFT stock is soaring after earnings. See the chart and price action here.  The change stems entirely from an accounting adjustment, not a shift in actual investment plans. Microsoft is extending the estimated useful life of its data centers and office buildings from 15 years to 25 years, effective at the start of fiscal 2027.  

Extending that useful-life assumption pushes more future data center leases into the operating lease category rather than finance leases. Finance leases count toward reported capex, while operating leases do not.

The reclassification alone accounts for the missing $15 billion, even though Microsoft is not spending a dollar less on servers, chips or buildings.

CFO Amy Hood addressed the distinction directly on the earnings call, noting that “outside of this useful-life impact, our calendar year 2026 capex investment expectations remain unchanged."

The underlying spending trajectory still points sharply upward. Microsoft expects fiscal first-quarter 2027 capex, including finance leases, to exceed $50 billion. Fourth-quarter fiscal 2026 capex and finance leases already jumped 69% year-over-year to $41 billion. 

Hood also confirmed that fiscal 2027 capex will grow year-over-year, telling analysts: “We expect FY27 capital expenditures will grow year-over-year given demand signals across our portfolio."

The lesson for anyone tracking hyperscaler AI spending: the $175 billion figure reflects a bookkeeping shift in lease classification, not reduced conviction in Microsoft’s data-center buildout.

MSFT Stock Price Activity: Microsoft stock was up 15.66% at $451.71 at the time of publication Thursday, according to data from Benzinga Pro.

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Market News and Data brought to you by Benzinga APIs

© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Americké akcie zažívají období zvýšené volatility. Jde pouze o zdravou korekci v rámci rostoucího trhu, nebo o začátek hlubšího poklesu? Podle makléře Patria Finance Matěje Vlčka je zatím pravděpodobnější první scénář, ale zároveň očekává další slabost zejména u technologických indexů.

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00:23 Americké trhy pohledem technické analýzy
03:11 Výsledky Microsoftu a Mety
06:58 Výsledky Komerční banky a Erste Bank

Trhy ztrácejí momentum. Korekce ale může být příležitost

Americké akcie mají za sebou velmi silné období, především díky umělé inteligenci a růstu technologických gigantů. Poslední týdny však přinesly zvýšenou volatilitu a investoři začínají být nervózní.

Matěj Vlček při pohledu na technickou analýzu sleduje zejména to, jak se mění dynamika trhu před většími korekcemi. „Před každým pohybem na trhu máme boční trend,“ vysvětluje. „Ten trh má tendenci se začít kulatit a ztrácet momentum. Ze silného trendu nahoru se stane boční trend a pak přijde korekce. To pozoruji i teď,“ říká Vlček.

Na indexu S&P 500 vidí první významnou zónu podpory poblíž 7200 až 7300 bodů. Zároveň ale upozorňuje, že pravděpodobnost jejího dlouhodobého udržení není podle něj příliš vysoká. „Myslím si, že je velká šance, že se podíváme pod 7000 bodů na indexu S&P 500,“ odhaduje.

Nasdaq slabší než S&P 500

Ještě větší opatrnost cítí u technologického indexu Nasdaq 100 . Ten podle něj vysílá slabší technické signály než širší trh a velkou roli v tom hraje vývoj polovodičového sektoru, který byl v posledních měsících hlavním tahounem růstu.

„Na Nasdaqu už ten boční trend vidím proražený směrem dolů. Tenhle pohyb je tažený hlavně polovodiči, kteří měli v posledních měsících suverénně nejvyšší betu,“ upozorňuje. „Pro dlouhodobé investory už mohou být současné úrovně impulsem k drobným nákupům. Určitě bych se toho nebál,“ říká.

Microsoft ukázal, že investice do AI začínají fungovat

Nejsledovanější událostí týdne byly výsledky technologických gigantů Microsoft a Meta Platforms. Zatímco obě firmy masivně investují do umělé inteligence, reakce investorů byla výrazně odlišná.

Microsoft podle Vlčka dokázal přesvědčit trh, že vysoké kapitálové výdaje začínají přinášet konkrétní výsledky. A pozitivně hodnotí také pokračující růst služby Copilot. Právě schopnost proměnit miliardové investice do datových center a AI infrastruktury v reálné příjmy je podle něj důvodem, proč zůstává Microsoft jedním z nejatraktivnějších titulů na trhu.

Meta je nepochopený příběh

Zcela odlišnou reakci investorů vyvolaly výsledky společnosti Meta Platforms. Ačkoliv byznys firmy dál roste, trh zůstává skeptický kvůli obřím investicím do umělé inteligence. „Capexy rostou, ale výsledky za tím přímo vidět nejsou a cash flow na akcii je menší a menší,“ shrnuje Vlček.

Podle něj ale investoři přehlížejí jeden důležitý detail. Meta dlouhodobě zlepšuje reklamní systémy pomocí AI, což se projevuje v růstu reklamních příjmů. Vazba mezi investicí a výsledkem ale není tak přímočará jako u Microsoftu. „U Mety je tam ten mezikrok, který investoři neradi vidí,“ vysvětluje.

Právě proto považuje současné ocenění za zajímavou příležitost. „Pokaždé, když je Meta pod 600 dolary, je to za mě dobrá nákupní příležitost.“

Naopak u Microsoftu se podle něj nejlepší nákupní příležitosti objevily během předchozí korekce. „Ty opravdu dobré nákupy byly pod 400 dolary. Tam si myslím, že nejlepší příležitosti už můžeme mít za sebou,“ říká.

České banky vydělávají, ale valuace jsou náročnější

Vedle amerických technologických titulů se makléř věnoval také výsledkům českých bank. Vlček připouští, že současné prostředí je pro bankovní sektor mimořádně příznivé. Pozitivně hodnotí zejména schopnost Komerční banky i Erste Bank udržovat pod kontrolou náklady.

U Komerční banky ale zůstává opatrný. „Je to super titul, má dividendu, ale pro nový vstup bych si představoval cenu někde kolem 800 korun,“ říká.

O něco pozitivněji vnímá Erste. „Je to banka, které se daří. Má růst jak na vkladech, tak na úvěrovém portfoliu,“ hodnotí, ale i tam upozorňuje, že investoři by měli zohlednit mimořádně silnou výkonnost posledních let.

Kde dnes vidí největší příležitost?

Přestože české banky dál generují solidní výsledky a vyplácejí atraktivní dividendy, největší investiční potenciál podle Vlčka stále leží ve Spojených státech. Ne v polovodičích, které byly dosud hlavní hvězdou trhu, ale právě mezi velkými technologickými firmami, které v posledních měsících ztratily část investorů.

A Meta je podle něj nejzajímavějším příběhem současnosti. Pro dlouhodobé investory tak podle něj současná nervozita nemusí představovat důvod k ústupu z trhu, ale spíše příležitost začít budovat pozice v kvalitních firmách za výrazně zajímavější ceny.

Microsoft CEO Satya Nadella Sven Hoppe/picture alliance via Getty Images Meta's message to investors: The AI spending will continue until returns improve.

Investors' response: No thanks.

AI spend was the big focus during Meta's Q2 earnings report. And the pitch wasn't convincing enough to stop an after-hours selloff.

Meta was happy to credit AI with helping its advertising business (its bread and butter) rise 27%. And it wasn't just pure growth. Ad impressions grew 14%, while the average price per ad climbed 12%.

There's just one catch. Meta is still spending an incredible amount — $31.1 billion, roughly double what it spent last year — on its AI bets. That's eating up a significant portion of its free cash flow, which went from $8.55 BILLION to $784 MILLION. One analyst said the AI strategy is like "throwing spaghetti at the wall."

Investors were unimpressed, with Meta's stock falling nearly 10% at one point after the bell.

Compare that to another tech giant that reported yesterday: Microsoft. It logged wins in Azure and Microsoft 365 Copilot, which Microsoft CFO Amy Hood touted in her quarterly memo to employees viewed by BI's Ashley Stewart. Perhaps more importantly, its AI budget forecast didn't budge.

Investors noticed. Microsoft's stock jumped almost 8% in after-hours trading.

The difference between the two is clear: AI spending is fine … as long as there is a direct and measurable return.

CEO Mark Zuckerberg made the case for why Meta's AI bets might need more time.

A lot of the most immediate use cases for AI are for developers. Just look at the boom in vibe coding. "Building for consumers is a little bit different," Zuckerberg said during Wednesday's earnings call, but it's also a "massive market opportunity."

And who better to serve that market than the king of all social networks? Between Facebook, Instagram, WhatsApp, and Threads, Meta has billions of users across its platforms. Zuckerberg said Meta's making a big bet on AI agents.

That all tracks with one small exception: A lot of Americans are really nervous about AI.

Meta has tried to ease those fears with a big AI PR push, including a Zuckerberg op-ed and some interviews with reporters. (The request to speak to BI Today must have got caught in my spam inbox. I'm happy to chat, Mark. Sounds like you have a really cool gym.)

BI's Peter Kafka has an idea about how Meta could better convince people to get on board with AI. (Hint: It's green.)

Whatever the plan is, Meta had better figure something out fast. Investors are running out of patience.

Dan DeFrancesco You're currently following this author! Want to unfollow? Unsubscribe via the link in your email.

Dan is the lead writer for BI Today, Business Insider's flagship daily newsletter. Dan often interviews executives about everything from AI's impact on capitalism to robotics to the potential SaaSpocalypse as part of his work on the newsletter.Dan was an editor and reporter at BI, covering financial technology and market structure.His previous work includes everything from inside Robinhood's failed "Checking and Savings" product that eventually led to Congress getting involved to the internal arguments over JPMorgan's failed attempt to launch a finance app for millennials.Before joining Business Insider, Dan wrote about risk management in derivatives markets for Risk.net and fintech for WatersTechnology. He initially covered local sports for The Journal News, a daily newspaper serving the lower Hudson Valley. Got a tip? Contact this editor via email at [email protected].

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Yesterday, both Microsoft Corporation (Nasdaq: MSFT) and Meta Platforms, Inc. (Nasdaq: META) reported their most recent quarterly results. The companies are not only two of America's biggest tech giants but also among the most significant players in the AI space.

Along with producing a 9.82% extended-session stock upsurge from $390.54 to $428.91, Microsoft’s (NASDAQ: MSFT) latest earnings report led to a veritable deluge of analyst rating and price target upgrades.

Furthermore, among more than a dozen notes, only one positioned MSFT shares as a ‘Hold.’ Still, even the comparatively bearish assessment by Stifel Nicolaus’ Brad Reback came with a stock price forecast lift from $400 to $450.

On the other end of the spectrum, Rishi Jaluria of RBC Capital assessed that Microsoft shares are headed toward $640 in the coming 12 months, while Bernstein’s Mark Moerdler dropped the old $646 price target in favor of the new $647.

Both of the bullish analysts also issued positive recommendations for MSFT stock, much like the vast majority of their peers.

Overall, and following the latest string of notes, Microsoft is considered a ‘Strong Buy’ on Wall Street and expected to rally 42.44% to $556.29 on average by analysts, per the data Finbold retrieved from TipRanks on July 30.

Wall Street sets Microsoft stock price target for the next 12 months. Source: TipRanks Why Microsoft stock is seen as a ‘Strong Buy’ on Wall Street Meanwhile, the Thursday morning positivity can be linked directly to the blue-chip technology giant’s latest earnings report. Specifically, Microsoft reported $90.01 billion in revenue and earnings per share (EPS) of $4.74.

Forecasts called for $4.24 EPS and $87.62 billion in sales, meaning the big tech company managed a double beat. 

Additionally, Azure cloud growth accelerated to 43% – faster than the predicted 40% – reinforcing the positivity, and investors appear to have remained unfazed concerning capital expenditures (CapEx), in stark contrast to Google’s (NASDAQ: GOOGL) filing made a week before and Meta’s (NASDAQ: META) presentation made public on Wednesday afternoon.

Investors react to latest Microsoft earnings report Indeed, after dropping 17.42% between January 2 – the first regular session of the year – and the closing bell on July 29, Microsoft stock suddenly soared 9.82% to its press time price of $428.91.

Microsoft stock price YTD chart. Source: TipRanks The move might present a turning point for the embattled technology giant, and it decreased the year-to-date (YTD) market capitalization loss to roughly $500 billion, down from $750 billion.

Featured image via Shutterstock

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Stock futures are pointing to a higher open for major indexes after yesterday's massive sell-off. ; the U.S. and Iran are trading strikes again as hopes for new peace talks have fallen apart; the Fed's preferred gauge of inflation is expected to show that price increases slowed last month; shares of Meta and Microsoft are making big moves after their latest earnings reports, just in opposite directions; and Apple and Amazon are set release their quarterly results after the closing bell.

© Mariakray / iStock Editorial via Getty Images

Shares of Microsoft (NASDAQ:MSFT | MSFT Price Prediction) are up 9% in early Thursday trading, changing hands at $427 after the software giant delivered a fiscal fourth-quarter blowout and crossed a symbolic Azure milestone. The pop lifts the stock off Wednesday’s $390.54 close and pushes it back toward levels last seen in the spring.

As of yesterday’s close, Microsoft stock was down 19% year to date (YTD), so this reads more like a relief rally in a beaten-down mega-cap than a fresh breakout. The move follows Wednesday afternoon’s earnings release, and it’s driving strength across AI-linked names.

Investors are digesting what the earnings report says about cloud capex, Copilot monetization, and the broader mega-cap earnings setup heading into Amazon’s report. That framing sets up the rest of the reaction across the AI complex.

Azure Tops $100B and Q4 Blows Past Estimates Microsoft posted fiscal Q4 2026 revenue of $90 billion, up 18%, ahead of the $87.62 billion consensus. Microsoft’s diluted earnings per share landed at $4.81, up 32%, or $4.74 excluding a gain tied to the OpenAI investment.

The centerpiece was Azure. Growth accelerated to 43% from 40% the prior quarter, and Azure crossed $100 billion in revenue for the full fiscal year for the first time. Microsoft Cloud revenue reached $59.3 billion, up 27%, and commercial remaining performance obligations jumped 84% to $678 billion. Management also disclosed more than 30 million paid Copilot seats.

The bigger relief was on spending. Microsoft’s capital expenditures including leases came in at $41 billion, below the $42 billion feared. CFO Amy Hood stated that capex will grow further in fiscal 2027 while the company stays free-cash-flow positive, and Microsoft is extending the useful life of office and data center buildings to 25 years from 15. Microsoft’s fiscal Q1 2027 revenue guidance of $89.85 billion to $90.95 billion also topped Street models.

Analysts Lift Most Microsoft Price Targets Sell-side reactions skewed positive, if not unanimous. Citi raised its Microsoft stock price target to $600 from $570, keeping a Buy and calling the report a “solid rebuttal to the bear case.” Wells Fargo lifted its target to $650 from $625, while Bernstein nudged its target to $647 from $646, both at Outperform.

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Piper Sandler moved to $550 from $540 at Overweight, citing Azure’s 43% constant-currency growth and the Copilot seat count. The outlier was Barclays, which trimmed its MSFT stock price target to $512 from $545 while keeping Overweight, arguing investors would revisit the shares after Q4.

Capex Discipline Rewards Microsoft as Peers React The setup stands in sharp contrast to last week’s tape. Alphabet‘s (NASDAQ:GOOGL) Google raised its 2026 capex outlook to $195 billion to $205 billion, up from $180 billion to $190 billion and above the $186.4 billion expected. Alphabet stock fell more than 6% on the news, so today’s Microsoft stock reaction reads as the market rewarding disciplined AI spending.

Amazon (NASDAQ:AMZN), home to AWS, will face a higher bar when it reports next. Amazon stock trades 2% lower YTD. NVIDIA (NASDAQ:NVDA), the primary chip beneficiary of Azure’s infrastructure buildout, is a natural read-through winner given Microsoft’s commitment to keep spending on GPUs.

The Technology Select Sector SPDR Fund (NYSEARCA:XLK) is on-theme here, with Microsoft at 11.84% and NVIDIA at 14.93% of the fund. That mega-cap concentration means the ETF often moves in lockstep with these two names. The ETF is up 16% YTD.

What to Watch Now Investors can watch for whether Microsoft stock holds the $427 into Thursday’s close, and whether follow-through develops in Amazon, NVIDIA, and other AI-infrastructure plays. Polymarket prediction markets are pricing a 94.5% probability that Microsoft stock closes above $400 today, so a fade toward that level would carry more weight than a routine intraday dip.

The next test is Amazon’s earnings, where AWS growth will be measured against Azure’s accelerating 43% pace. If the cloud-reacceleration story holds across both hyperscalers, today’s move may prove to be the start of a broader rerating rather than a one-day pop.

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today.

Contact [email protected] for any questions or corrections.

Artificial intelligence remains the biggest force shaping today’s stock market, but investors are becoming more selective about where they’re willing to place their bets. For the past two years, simply announcing larger AI investments often lifted semiconductor stocks, cloud providers, and software companies alike. That era may be ending. 

Microsoft‘s (NASDAQ:MSFT | MSFT Price Prediction) fiscal fourth-quarter results and Meta Platforms‘ (NASDAQ:META) latest earnings, both released this week, showed that Wall Street is no longer rewarding AI spending alone. Instead, investors want proof those billions are already generating measurable returns. The dramatically different reactions to two otherwise strong quarters may be the clearest sign yet that execution now matters more than ambition.

Microsoft Showed the AI Flywheel Is Already Turning Microsoft delivered exactly what investors hoped to see. Fiscal fourth-quarter revenue rose 18% year over year to $86.2 billion while earnings per share climbed 24% to $3.65. More importantly, Azure revenue accelerated 43% in the quarter, or 45% in constant currency, pushing Microsoft’s commercial cloud business beyond a $100 billion annual revenue run rate.

That matters because Microsoft isn’t simply spending on AI — it’s selling AI infrastructure through Azure. Every new GPU cluster, networking upgrade, and data center expansion has paying enterprise customers attached to it.

The company also reassured investors that spending isn’t slowing. Management guided first-quarter capital expenditures to roughly $50 billion, up from about $41 billion in fiscal Q4, while saying fiscal 2027 capital spending will rise again based on demand across its product portfolio.

Even Microsoft’s accounting update worked in its favor. CFO Amy Hood explained on the earnings call that more future data center leases will shift from finance leases to operating leases. That change reduces reported capital expenditures to approximately $175 billion for calendar 2026 without altering Microsoft’s underlying investment plans. Investors heard a simple message: spending remains aggressive, but management is carefully controlling how it appears on the financial statements.

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Meta Is Asking Investors for More Patience Meta reported another quarter of healthy revenue growth, but Wall Street focused elsewhere. The company raised the lower end of its 2026 capital expenditure guidance to a range of $130 billion to $145 billion while free cash flow plunged 91% year over year to just $784 million.

The difference is that Meta’s AI investments largely serve its own ecosystem. The company hopes larger AI models improve advertising performance, increase engagement across Facebook and Instagram, and eventually support AI assistants and new products. Those opportunities could become meaningful businesses, but they are still developing.

Here is why the market reacted as it did:

Factor Microsoft Meta Why It Mattered Monetization Azure cloud revenue grew 43%-45%; commercial cloud topped $100 billion annual run rate AI primarily improves Meta’s own platforms Microsoft already earns revenue directly from AI infrastructure Capital Spending Higher investment with accounting change reducing reported capex Raised 2026 capex floor to $130-$145 billion Microsoft emphasized discipline; Meta emphasized bigger spending Free Cash Flow Generated $19.6 billion Fell 91% to $784 million Cash generation remains far stronger at Microsoft Earnings Beat revenue and EPS expectations Revenue beat, but EPS missed as expenses climbed Profitability mattered more than revenue alone Visibility Azure backlog and cloud demand continue accelerating Future AI products remain largely unproven Investors prefer returns they can already measure Ironically, both companies are making the same long-term bet. The difference is that Microsoft can already point to customers writing checks today, while Meta is asking shareholders to trust that today’s spending produces tomorrow’s profits.

Key Takeaway In short, the market isn’t rejecting massive AI spending — it is demanding evidence that the spending is producing measurable returns. Microsoft provided that evidence through Azure’s accelerating growth, expanding cloud revenue, and a business model that monetizes AI infrastructure immediately. Meta offered a compelling long-term vision, but its collapsing free cash flow and higher capital spending reinforced concerns that the payoff remains several years away.

Ultimately, that’s an important lesson for investors across the AI ecosystem. Companies selling the picks and shovels of AI — from GPUs and memory to networking and optical components — still benefit when hyperscalers keep spending. But as Microsoft’s and Meta’s earnings showed, Wall Street has become much more discerning about who deserves credit for that spending. In this stage of the AI cycle, visibility, cash flow, and near-term monetization are proving far more valuable than bold promises alone.

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today.

Contact [email protected] for any questions or corrections.

, /PRNewswire/ -- Glancy Prongay Wolke & Rotter LLP announces that investors with losses have opportunity to lead the securities fraud class action lawsuit against Microsoft Corporation.

IF YOU SUFFERED A LOSS ON YOUR MICROSOFT CORPORATION INVESTMENTS, CLICK HERE BEFORE AUGUST 11, 2026 (LEAD PLAINTIFF DEADLINE) TO PARTICIPATE IN THE SECURITIES FRAUD LAWSUIT

What Is The Lawsuit About? 
The complaint filed in this class action alleges that between May 1, 2025 and January 28, 2026, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Microsoft's Copilot family of products had experienced significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems; (2) that Microsoft's flagship proprietary AI model ranked well below competitors on a number of benchmark tests; (3) that Microsoft needed to increase by billions of dollars its capital expenditures and divert GPU and CPU capacity away from fulfilling demand for its profitable Azure services in order to improve the competitive positioning of its critical Copilot family of products and increase its AI-related R&D; (4) that, as a result of the foregoing, Microsoft had failed to convert a significant percentage of its commercial Microsoft 365 users to paid Copilot subscriptions and the Company's Copilot offerings had lost market share to rival products, a trend that was increasing; and (5) as a result, Defendants' positive statements about the Company's business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.

What's The Next Step? 

Glancy Prongay Wolke & Rotter LLP is a leading national shareholder rights law firm, ready to assist you in potentially pursuing claims to recover your loss.

If you wish to serve as lead plaintiff, you must move the Court no later than August 11, 2026. Please contact us to learn more about your rights and interests by clicking here, by email ([email protected]), or by telephone at 310-201-9150 (Toll-Free: 888-773-9224).

You may retain counsel of your choice. If you bought securities during the class period, you may take no action and remain an absent class member. No class has been certified yet.

Why Glancy Prongay Wolke & Rotter LLP?

GPWR is a premier law firm with decades of experience representing investors and consumers in securities litigation and other complex class action litigation. Recognizing the firm's recent successes, GPWR was named one of Law360's Securities Groups of the Year and ranked 2nd in total investor recoveries by Institutional Shareholder Services Securities Class Action Services in 2025. GPWR's lawyers have handled cases covering a wide spectrum of corporate misconduct and relating to nearly all industries and sectors. GPWR's past successes have been widely covered by leading news and industry publications such as The Wall Street Journal, The Financial Times, Bloomberg Businessweek, Reuters, the Associated Press, Barron's, Investor's Business Daily, Forbes, and Money. Prior results do not guarantee a similar outcome.

This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.

Contact Us: 
Glancy Prongay Wolke & Rotter LLP,  
1925 Century Park East, Suite 2100,
Los Angeles, CA 90067
Charles Linehan
Email:  [email protected]
Telephone: 310-201-9150
Toll-Free: 888-773-9224
Visit our website at: www.glancylaw.com.

SOURCE Glancy Prongay Wolke & Rotter LLP

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In the night between July 29 and July 30, Microsoft (NASDAQ: MSFT) stock broke with its own history and the wider 2026 trend and soared after publishing its filing for the fourth quarter (Q4) of fiscal year 2026 (FY2026).

Specifically, after sliding 0.71% from $393.35 to $390.54 during the regular session preceding the earnings report, MSFT shares soared 8.88% to their after-hours price of $425.21.

Microsoft stock price one-day chart. Source: Google Overall, the move ensured that Microsoft added $257 billion to its market capitalization in a single night after losing approximately $700 billion from $3.6 trillion at the end of 2025 and falling to $2.9 trillion at the July 29 closing bell.

Why Microsoft stock just soared 8% in the extended session Examining the document, the blue-chip technology giant managed a double beat as it recorded an earnings per share (EPS) of $4.74 – $4.24 was forecasted – and revenue of $90.01 billion – analysts were calling for $87.62 billion.

Azure growth was a standout metric within the filing, considering it accelerated to 43% – up from 40% in the previous quarter – and the overall Intelligent Cloud segment saw $39.31 billion in revenue.

The sales figure represents a 31.6% rise from one year prior and was above the analyst estimate of $38.16 billion.

Additionally, though free cash flow fell to $19.64 billion, the 23% drop proved minuscule in comparison to Meta Platforms (NASDAQ: META), revealed on the same day.

Notably, and unlike several of its peers, Microsoft was not penalized for its vast capital expenditures (CapEx) finance losses, which amounted to $41 billion in Q4 and are expected to hit roughly $175 billion on an annual basis.

Investors have grown increasingly wary of runaway CapEx due to the uncertain return on investment (ROI) on artificial intelligence (AI) and related infrastructure.

Is this the most important detail in the latest Microsoft earnings report? Lastly, a detail traders should remain aware of was the decision to increase the nominal useful life of data center and office buildings from 15 to 25 years. 

Comparisons to the cables laid out during the Dot-com era – and the fact that particular expense proved valuable years later – have been a key element during the AI buildout. 

The fact that high-tech hardware has a significantly shorter shelf life than wires in the ground has been an important argument in the toolbox of the skeptics, making both Microsoft’s latest decision and the earlier cloud provider choice to extend the useful life of GPUs and other such equipment from 4 to 6 years a potential indicator of attempted financial alchemy.

Still, it is also possible that corporate hardware has been moving in the opposite direction from consumer devices and they have grown more robust and durable over the years.

Featured image via Shutterstock

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