Track market-moving stories before they get noisy

Posted by Defense World Staff on Jul 31st, 2026

Shares of Microsoft Corporation (NASDAQ:MSFT – Get Free Report) shot up 15.5% during trading on Thursday following a better than expected earnings announcement. The company traded as high as $458.69 and last traded at $451.10. 109,445,388 shares were traded during trading, an increase of 191% from the average session volume of 37,615,195 shares. The stock had previously closed at $390.54.

The software giant reported $4.74 EPS for the quarter, topping the consensus estimate of $4.24 by $0.50. The firm had revenue of $90.01 billion during the quarter, compared to analysts’ expectations of $87.62 billion. Microsoft had a net margin of 40.31% and a return on equity of 33.07%. Microsoft’s revenue for the quarter was up 17.7% on a year-over-year basis. During the same period in the previous year, the company earned $3.65 EPS.

Microsoft Announces Dividend The firm also recently announced a quarterly dividend, which will be paid on Thursday, September 10th. Investors of record on Thursday, August 20th will be paid a $0.91 dividend. This represents a $3.64 annualized dividend and a yield of 0.8%. The ex-dividend date is Thursday, August 20th. Microsoft’s dividend payout ratio is presently 21.67%.

Key Stories Impacting Microsoft Here are the key news stories impacting Microsoft this week:

Positive Sentiment: Azure growth exceeded expectations: Azure revenue increased 43%, ahead of roughly 40% analyst expectations, and annual Azure revenue surpassed $100 billion for the first time. The performance eased concerns that demand for AI infrastructure might be slowing. Microsoft tops quarterly cloud growth estimates Positive Sentiment: Strong earnings beat: Microsoft reported $4.74 in adjusted EPS versus a $4.24 consensus estimate and $90.01 billion in revenue versus expectations of $87.62 billion. Revenue rose 17.7% year over year, while profit increased about 31%. Microsoft fourth-quarter earnings Positive Sentiment: AI monetization is accelerating: Microsoft 365 Copilot surpassed 30 million paid seats, while management described the next growth phase as a “per seat plus consumption” model. Investors viewed Azure and Copilot adoption as evidence that AI investments are translating into commercial demand. Positive Sentiment: Spending concerns moderated: Microsoft held its capital-expenditure outlook broadly steady and said it expects continued cash generation in fiscal 2027. Management also said GPU spending could be adjusted if demand weakens, helping counter fears of unchecked AI-related cash burn. Microsoft keeps capex forecast unchanged Positive Sentiment: Backlog and analyst support improved: Commercial remaining performance obligations reached a record $678 billion, up 84% year over year. RBC, Goldman Sachs, BMO, TD Cowen and DA Davidson were among firms maintaining positive ratings or raising targets. Neutral Sentiment: Xbox strategy: New gaming chief Asha Sharma aims to exceed peers’ margins by 2030 through Minecraft investment and partnerships, including in China. The plan could support longer-term profitability but remains execution-dependent. Microsoft Xbox margin plan Negative Sentiment: Risks remain: Wiz reported a cloud vulnerability that could have exposed Microsoft customers, while U.K. regulators are investigating Microsoft 365 subscription marketing. Several securities-fraud law firms also publicized shareholder lawsuits. These developments are potential overhangs, although they did not offset the earnings-driven optimism. Wall Street Analyst Weigh In Several analysts have commented on the company. Citizens Jmp restated a “market outperform” rating and issued a $550.00 price target on shares of Microsoft in a report on Tuesday. Wolfe Research reiterated an “outperform” rating and set a $550.00 price objective on shares of Microsoft in a report on Thursday. CLSA reissued an “outperform” rating on shares of Microsoft in a research report on Thursday. Royal Bank Of Canada restated an “outperform” rating and issued a $640.00 target price on shares of Microsoft in a report on Thursday. Finally, Arete Research upped their price target on shares of Microsoft from $730.00 to $870.00 and gave the stock a “buy” rating in a research report on Tuesday, May 5th. Forty-two investment analysts have rated the stock with a Buy rating and five have issued a Hold rating to the stock. Based on data from MarketBeat.com, the company currently has a consensus rating of “Moderate Buy” and a consensus price target of $558.64.

Read Our Latest Stock Report on MSFT

Insider Transactions at Microsoft In other Microsoft news, EVP Takeshi Numoto sold 4,500 shares of Microsoft stock in a transaction that occurred on Wednesday, June 10th. The shares were sold at an average price of $402.84, for a total transaction of $1,812,780.00. Following the transaction, the executive vice president directly owned 47,468 shares of the company’s stock, valued at $19,122,009.12. The trade was a 8.66% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is accessible through this hyperlink. Also, CEO Judson Althoff sold 15,500 shares of the business’s stock in a transaction that occurred on Monday, June 1st. The stock was sold at an average price of $460.99, for a total transaction of $7,145,345.00. Following the sale, the chief executive officer owned 110,477 shares of the company’s stock, valued at approximately $50,928,792.23. This represents a 12.30% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. In the last quarter, insiders sold 23,762 shares of company stock worth $10,508,361. 0.03% of the stock is currently owned by company insiders.

Hedge Funds Weigh In On Microsoft Hedge funds have recently made changes to their positions in the business. Longfellow Investment Management Co. LLC grew its stake in shares of Microsoft by 51.3% in the second quarter. Longfellow Investment Management Co. LLC now owns 59 shares of the software giant’s stock valued at $29,000 after buying an additional 20 shares in the last quarter. Bernzott Capital Advisors purchased a new stake in shares of Microsoft during the 4th quarter valued at about $34,000. Timmons Wealth Management LLC acquired a new position in Microsoft during the 4th quarter worth approximately $36,000. Fairway Wealth LLC lifted its position in Microsoft by 287.0% during the 4th quarter. Fairway Wealth LLC now owns 89 shares of the software giant’s stock worth $43,000 after acquiring an additional 66 shares in the last quarter. Finally, Frankly Finances LLC purchased a new position in Microsoft in the 2nd quarter worth approximately $35,000. Hedge funds and other institutional investors own 71.13% of the company’s stock.

Microsoft Stock Performance The company has a debt-to-equity ratio of 0.08, a quick ratio of 1.27 and a current ratio of 1.28. The stock has a fifty day simple moving average of $397.07 and a two-hundred day simple moving average of $405.54. The stock has a market cap of $3.35 trillion, a PE ratio of 25.12, a PEG ratio of 1.20 and a beta of 1.13.

About Microsoft (Get Free Report)

Microsoft Corporation is a global technology company headquartered in Redmond, Washington. Founded in 1975 by Bill Gates and Paul Allen, Microsoft develops, licenses and supports a broad range of software products, services and devices for consumers, enterprises and governments worldwide. Its operations span personal computing, productivity software, cloud infrastructure, enterprise applications, developer tools and gaming.

Microsoft’s product portfolio includes the Windows operating system and the Microsoft 365 suite of productivity and collaboration tools (Office apps, Outlook, Teams).

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Microsoft CEO Satya Nadella Fortune via Reuters Connect For several years, Big Tech has operated under a simple rule: spend more on AI, or investors will assume you're falling behind. This earnings season, that rule may have changed.

Even a year ago, if one of the cloud giants had merely held its AI spending plans steady while rivals kept increasing theirs, Wall Street probably would have panicked. Investors would have assumed AI demand was cooling or that the company had lost confidence in its competitive position.

Instead, Microsoft did exactly that this week, and its stock exploded higher — adding the most market value in one day by any US company in history.

Late Wednesday, the company kept its 2026 capital spending plan unchanged. (It actually fell from $190 billion to $175 billion due to an accounting tweak).

Meanwhile, Google added another $15 billion to its forecast, Amazon increased 2026 spending by $20 billion, and Meta boosted its plans, too.

The contrast is even starker once you look beneath the headline numbers. Memory chip prices have soared, which has pushed capex even higher. Microsoft isn't immune to this. That means its decision to hold spending steady is arguably more cautious than it first appears. If memory costs are rising while your overall budget stays flat, less money is left over for actually building those AI data centers.

And yet, investors loved it. When CFO Amy Hood outlined the conservative spending plan on a call with analysts, Microsoft shares immediately surged.

By the end of Thursday, the stock was up 15%, Microsoft's best day on the market in almost two decades. Strong Azure growth and surging Copilot adoption helped. But investors were mostly enthused by evidence that someone is thinking hard about returns, not just spending.

Before earnings season, I wondered whether any of the tech giants would blink in the race. Microsoft blinked a little, and Wall Street applauded.

Sign up for BI's Tech Memo newsletter here. Reach out to me via email at [email protected].

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

Alistair Barr is the author of Business Insider's Tech Memo newsletter. Sign up here. Before that, he was BI's Global Tech Editor and the Big Tech team leader at Bloomberg, following a reporting career at The Wall Street Journal, USA Today, Reuters, and MarketWatch. Alistair won a Gerald Loeb Award in 2007 for coverage of short selling and was a finalist in 2013 for scoops on the Facebook IPO. More recently, he won a 2024 San Francisco Press Club award for commentary. Got a tip? Reach out using the secure messaging app Signal (+1 415-341-4927) or via email on [email protected] oversees all things Big Tech, along with startups and venture capital. He writes analysis and columns about topics including generative AI, large language models, cloud computing, semiconductors, online search, e-commerce, EVs, robotics, and autonomous vehicles.Popular StoriesArtificial Intelligence:It's getting harder to make big leaps at the frontier of AIOpenAI's AI-adjusted earnings numbers have echoes of Groupon and WeWorkDeath by LLM: Stack Overflow's decline, and its plan to survive, shows the future of free online data in an AI worldCloud computing:Amazon dominated the first cloud era. The AI boom has kicked off Cloud 2.0, and the company doesn't have a head start this time.In cloud, there's AI (which is hot) and everything else (which is not)Chips:Why Intel is still so important: Real countries have fabsApple's made-in-the-USA chips signal a turnaround for the US's big semiconductor betEVs and Tesla:Tesla's AI supercomputer has a Silicon Valley town rushing to meet surging electricity demandTesla's Cybertruck is outselling almost every other EV in the USOnline Search:Google is losing its status as a verbA simple way to fix search: Bright pink ads

Microsoft Google Amazon More Meta Data Centers Artificial Intelligence

Microsoft's (MSFT +15.51%) fiscal fourth-quarter report, released Wednesday afternoon, was full of big numbers. But one of them towers over the rest. Commercial remaining performance obligations came in at $678 billion, up 84% year over year.

That figure represents contracted work Microsoft has signed but not yet delivered -- revenue that customers have committed to but that hasn't reached the income statement. The revenue shows up only as Microsoft delivers the computing power and software those contracts cover, so the total speaks to how much demand exists, not when it arrives. Still, its scale is easier to appreciate with some context. Microsoft's revenue for all of fiscal 2026 (the year ended June 30) was $331.8 billion. In other words, the software giant has already booked more than two full years' worth of sales.

For a company that poured $115.9 billion into capital expenditures during the fiscal year, largely on the data centers behind its cloud and AI (artificial intelligence) services, that much signed demand is arguably the most important number in the report.

Image source: Getty Images.

Two years of sales, already signed A year ago, Microsoft's commercial backlog stood at about $368 billion. Today, it's at $678 billion -- that's an impressive 84% year-over-year growth rate.

And the quarter's financials were strong, too. Fiscal fourth-quarter revenue rose 18% year over year to $90.0 billion, and "Azure and other cloud services" revenue grew 43% -- an acceleration from 40% growth in fiscal Q3. Microsoft Cloud revenue came in at $59.3 billion, up 27%, while the intelligent cloud segment, which houses the Azure cloud computing business, grew revenue 32% to $39.3 billion. Profitability kept pace with all of it: Operating income climbed 18% to $40.6 billion, net income rose 31%, and earnings per share jumped 32% to $4.81 on a GAAP basis (up 23% to $4.74 excluding the OpenAI investment impact).

Growth is strong on a full-year basis, too. For the full fiscal year, Microsoft's revenue grew 18% while GAAP earnings per share rose 32%.

And demand isn't letting up. On the earnings call, chief financial officer Amy Hood said customer demand "continues to exceed available capacity," even after Microsoft added another gigawatt of data center capacity during the quarter. The company says it remains on track to roughly double its overall capacity in just two years.

How fast the backlog turns into revenue Of course, a backlog is a promise about the future, not revenue today. And Microsoft's own disclosures show that this one converts slowly.

On Wednesday's earnings call, chief financial officer Amy Hood said the backlog, including OpenAI, carries "a weighted average duration of 2.3 years," and that roughly 30% of it will be recognized as revenue in the next 12 months. That works out to something in the neighborhood of $200 billion of contracted work flowing through over the coming year -- and the rest arrives on a multiyear schedule. The near-term slice is up 37% from a year ago, while the portion due beyond 12 months more than doubled.

The OpenAI factor deserves attention, too. Hood said the backlog grew 25% year over year when excluding OpenAI. Set that against the headline 84% growth, and it's clear that a large share of the backlog's year-over-year growth traces to a single customer. That concentration doesn't make the backlog less real, but it does mean a meaningful piece of Microsoft's future rides on OpenAI's ability to keep paying for what it has ordered. And because OpenAI is private, investors can't examine its finances the way they could a public customer's.

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That said, the quarter offered an encouraging signal on exactly this front. Hood noted that all of the backlog's sequential growth -- the increase from the prior quarter -- "was driven by commitments from customers outside of frontier model companies."

In other words, the quarter's sequential backlog growth came from customers outside frontier model companies, not OpenAI. She also cautioned that the large OpenAI contracts signed last year will make bookings and backlog growth rates bumpy from quarter to quarter, so the headline growth figure will swing as those deals move through the comparisons.

What the backlog tells investors is that Microsoft has substantial signed demand behind its spending. What an 84% increase can't say is how profitably that demand converts.

That's why I'd rest the investment case on the results themselves. A company growing revenue 18% and earnings per share 32%, with two years of sales under contract, is about as sturdy as large-cap growth gets.

Massive single-day market cap gains prove once again that a few heavyweights can carry the entire market on their back.

Microsoft (MSFT - Free Report) ) reminded Wall Street why it remains one of the premier AI investments after delivering blockbuster results for its fiscal fourth quarter yesterday evening that handily topped expectations across nearly every major metric.

Better-than-expected Azure growth, accelerating AI adoption, robust cloud demand, and reassuring capital spending guidance helped ease concerns surrounding the company's massive AI investments. In response, MSFT spiked 15% in today’s trading session.  

With Microsoft starting to monetize artificial intelligence at an impressive pace while maintaining industry-leading profitability, investors have plenty to applaud following its latest quarterly results.

Image Source: Zacks Investment Research

Microsoft Delivers Another Quarter of Double-Digit GrowthFor its fiscal fourth quarter ended June 30, Microsoft generated $90 billion in revenue, an 18% increase from $76.44 billion in the prior-year period and comfortably above consensus expectations of roughly $87.44 billion. Adjusted earnings of $4.74 per share also easily surpassed analyst estimates of $4.21 and soared 30% from Q4 EPS of $3.65 a year ago.

Microsoft capped off its fiscal 2026 with annual revenue rising 18% to $331.8 billion while full-year adjusted EPS climbed 31% to $17.95, highlighting the ability to sustain exceptional growth despite already being one of the world's largest companies.

Just as encouraging, Microsoft continued to generate enormous profitability and cash flow even as it aggressively invests in AI infrastructure, reinforcing confidence that its spending is translating into meaningful financial returns.

Image Source: Zacks Investment Research

Azure & AI are Driving Microsoft's Expansion The biggest catalyst behind Microsoft's earnings beat was another outstanding quarter from its comprehensive cloud platform Azure.

During Q4, Azure and other cloud services revenue surged 43% YoY, with Microsoft's consolidated Cloud revenue increasing 27% to $59.3 billion, reflecting strength across Microsoft 365, Dynamics 365, and its broader commercial cloud portfolio.

Notably, Microsoft 365 Copilot surpassed 30 million paid users, illustrating rapidly growing enterprise adoption of generative AI tools.

These results further validate Microsoft's strategy of embedding AI across virtually every product it offers while leveraging Azure as the infrastructure powering a large part of the AI revolution.

Capital Spending No Longer Looks Like a ConcernPerhaps the major reason investors applauded Microsoft's Q4 report was what didn't happen.

Heading into earnings, the market was worried that Microsoft's enormous AI infrastructure investments would keep escalating and pressure profitability. Instead, Microsoft maintained a disciplined outlook on capital spending while demonstrating that previous investments are already driving meaningful revenue acceleration.

To that point, Microsoft reaffirmed its calendar 2026 capital expenditure outlook of $175 billion, easing fears that the company would need to accelerate AI spending even further.

Management also emphasized that AI demand continues to exceed available capacity, suggesting Microsoft's cloud growth remains supply constrained rather than demand constrained — a favorable position for future expansion.

The combination of accelerating Azure growth and measured spending significantly eased investor concerns that AI investments would weigh on shareholder returns after planning to double its CapEx from $65 billion last year.

Image Source: Zacks Investment Research

Microsoft’s Reasonable ValuationWhat may also be fueling investor sentiment is that Microsoft stock is trading at a reasonable 20X forward earnings multiple. This is near its Zacks Computer-Software Industry average while offering a slight discount to the benchmark S&P 500.

It’s also noteworthy that MSFT is trading at a 31% discount to its decade-long median of 29X forward earnings and is well below its high of 38X during this period.

Image Source: Zacks Investment Research

Bottom LineMicrosoft delivered exactly what investors wanted to see.

Revenue and earnings easily exceeded expectations, Azure growth accelerated to an impressive 43%, Copilot adoption continued to surge, and management alleviated concerns surrounding AI-related capital expenditures.

Those developments reinforced Microsoft's position as one of the leading beneficiaries of enterprise AI adoption and explain why investors enthusiastically rewarded the stock following its Q4 report.

At the moment, Microsoft stock lands a Zacks Rank #3 (Hold), but a buy rating could be on the way as earnings estimate revisions are likely to trend higher.

While the software company gained $450 billion in market value, Meta shares plunged.

Microsoft's new Xbox chief is looking to push the gaming unit's margin back in line with its rivals by next year and beat them on profitability by mid-2030.

"We will not live on past successes or be trapped by past failures," CEO Asha Sharma wrote in a Thursday message to staff members that CNBC viewed. "We will learn from both and put our energy into creating what players will love for decades."

Sharma, a former Instacart and Meta executive, replaced Phil Spencer as Xbox CEO in February. She has since appointed new leaders, lowered Game Pass subscription prices and announced layoffs and divestitures of four development studios. Sharma has put more emphasis on exclusive titles for the Xbox console, delighting gamers who have seen the subsidiary bring franchises to Sony's PlayStation.

On Wednesday, Xbox turned in a 10% quarterly revenue decline — the most sluggish performance since 2022 — even as its parent surpassed consensus in cloud infrastructure and productivity software. Microsoft stock spiked almost 16% on Thursday in its strongest session since 2008.

Sharma and Matt Booty, Xbox's chief content officer, said last month that they anticipated a 3% internal margin. Sony reported a 9.9% operating margin from game and network services in the latest fiscal year, while Nintendo's approached 16%.

The Xbox Series X and Series S consoles have lagged behind the Nintendo Switch and Sony PlayStation 5 in terms of shipments.

Sharma wrote in her Thursday memo that Xbox will make every function and studio responsible for the gaming group getting back to growth in terms of number of players and revenue in the new fiscal year that ends in June 2027.

"We will build long-term plans for our biggest franchises across film, television, consumer products, sponsorship, live experiences, and form new partnerships globally, including China," she wrote.

Read more CNBC tech newsAmazon posts 'booming' cloud growth, hikes 2026 capex to $220 billionApple earnings: Revenue tops estimates, but supply constraints weigh on guidanceChina's open-weight model lead exposes America's AI blind spotNew details in the OpenAI Hugging Face hack show how far agents will go: 'It's now remarkably easy'Sharma also said she wants to see Xbox gain share in casual games, partly through Activision Blizzard's King, which puts out Candy Crush Saga games.

Microsoft placed a giant bet on gaming with the $75.4 billion acquisition of Call of Duty publisher Activision Blizzard in 2023. The deal boosted revenue, but the subsidiary became overextended. Consumers got to try new high-value Call of Duty releases for short periods through Game Pass for a small fee and leave without paying full price. Game Pass now excludes the first-person shooter titles.

Microsoft CEO Satya Nadella told analysts on the software maker's Wednesday earnings call that in gaming, the company is "making the necessary decisions required across our content portfolio, platform and operations to reset the business for long-term growth."

In 2014, Microsoft acquired Mojang, the developer of block-building game Minecraft, for $2.5 billion. It surpassed Tetris as the world's best-selling game five years later.

Sharma told employees in her note that the company would "invest in Minecraft more than ever before, strengthening the experiences players love while expanding the tools that help people create, share, build audiences, and earn."

Sharma wrote that revenue growth must speed up in the 2028 and 2029 fiscal years.

"By FY30, our ambition is to be halfway to our long-term daily-player goal with sustained double-digit growth in players and engagement and industry leading margins," she wrote.

watch now

Nebius Group N.V. (NBIS +27.13%) stock was up 26.9% as of 3:05 p.m. ET Thursday. The S&P 500 and the Nasdaq Composite were up 1.6% and 2.7%, respectively.

Shares of the AI neocloud are rising along with much of the tech market, recovering from yesterday's sell-off. Quarterly results from Microsoft and Meta Platforms that pointed to still-strong demand for data center capacity have allayed fears that spending might start drying up.

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Microsoft and Meta signal AI spending isn't slowing down Microsoft reported earnings after Wednesday's close, saying it signed more than $130 billion in new data center leases during the quarter, a jump of over two-thirds from the prior quarter. CEO Satya Nadella said the company is on pace to roughly double its data center capacity within two years, with 31 new data centers coming online in the quarter alone. Sales for Azure, its cloud business, grew 43% year over year.

While Meta's results were lackluster, they still revealed strong demand for compute. CEO Mark Zuckerberg addressed the dilemma on how much to use the capacity it has built internally and how much to sell externally, given his company is "getting a lot of offers for compute at a significant premium over what we paid for it."

Image source: Getty Images

What this means for Nebius -- and why I'm still cautious All this is good news for Nebius -- which makes money by selling access to AI compute -- especially coming on the heels of a new $1 billion compute deal announced earlier this month. That being said, I'm not a fan of the stock given its valuation and the company's reliance on expensive debt to fuel growth.

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Microsoft. The Motley Fool has a disclosure policy.

CoreWeave (CRWV +21.51%) stock was up 23.5% as of 3:15 p.m. ET Thursday. The S&P 500 and the Nasdaq Composite were up 1.8% and 3%, respectively.

CoreWeave, the fast-growing neocloud, is seeing shares rise alongside the entire market. After a brutal sell-off at the end of trading yesterday, the tech market is recovering behind a strong earnings report from the tech behemoth Microsoft. Its report, alongside Meta's, showed demand for AI compute is still while-hot.

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Microsoft and Meta show AI compute demand is still white-hot Microsoft said its cloud platform Azure grew by a whopping 43% year over year behind continued AI demand. The company is scaling rapidly and relying heavily on leasing, signing more than $130 billion in new data center leases during the quarter. That's a jump of over two-thirds from the previous quarter.

CEO Satya Nadella said the company is on pace to roughly double its data center capacity within two years.

Image source: Getty Images

Although Meta's quarter largely disappointed investors, comments on the earnings call made it clear that the company also sees massive continued demand in AI compute.

Why I'm avoiding CoreWeave despite the good news The news that Microsoft and Meta still see so much demand and are leasing from third parties in part to meet it is great news for neoclouds like CoreWeave, which has deals with both tech giants.

Still, CoreWeave stock, even after falling heavily this year, is overvalued in my view. I would avoid the stock.

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Microsoft. The Motley Fool has a disclosure policy.

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.

Listen to the audio version of this article (generated by AI).

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

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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

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52-Week Range$349.20▼

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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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Apple (Nasdaq: AAPL) reports earnings after the bell. Wall Street expects fiscal Q3 EPS of $1.89 and revenue of $108.96 billion, both well above year-ago levels. The focus will be less on the headline and more on iPhone demand, Services margins, Greater China, tariff costs, and whether September guidance can clear a high bar. Analyst Gene Munster expects the outlook to come in line to slightly better than expected, with price increases helping offset a more staggered iPhone rollout. Apple shares are down 1.8% at last check.

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Advanced Micro Devices (Nasdaq: AMD) stock is soaring by 14.5% in a wider chip-stock rally that has the PHLX Semiconductor Index (SOX) up 9%. In addition to the semiconductor sector, market sentiment is being boosted today by Microsoft’s earnings results. MSFT stock is climbing 15.4% on the day.

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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.

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.

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.

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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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455.23

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.

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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.