Microsoft Shares Rise Friday, Extending Gains After Record Surge
Microsoft shares rose Friday, extending the previous session's gains. The stock surged 15.5% in Thursday trading, its biggest one-day percentage gain since the company's public listing and the largest single-day increase in market value in U.S. stock-market history. The remarkable performance followed Microsoft's fiscal 2026 fourth-quarter earnings report, released after Wednesday's close, which exceeded expectations across the board and eased concerns that the company's massive artificial-intelligence investments would be difficult to monetize. Microsoft reported quarterly revenue of $90 billion, up 18% from a year earlier and above the market expectation of $87.7 billion. Adjusted earnings per share rose 23% year over year to $4.74, far exceeding the $4.25 expectation. Revenue from Azure, the company's cloud business, rose 43% year over year, marking its fastest quarterly growth since early 2022. Full-year revenue surpassed $100 billion for the first time. Microsoft expects Azure growth to accelerate further to 45% in the next quarter. Paid seats for Microsoft 365 Copilot exceeded 30 million, up sharply from 20 million in the previous quarter, indicating that adoption of enterprise AI tools is accelerating. Commercial remaining performance obligations, a measure of future revenue, increased by $51 billion from the previous quarter to $678 billion, pointing to strong long-term customer commitments. Investors were also encouraged by Microsoft's restraint on capital spending. Capital expenditures totaled $41 billion for the quarter, below the $42 billion expectation. The company expects fiscal 2027 capital expenditures of about $175 billion, down from its previous estimate of $190 billion, and did not sharply raise its spending guidance as Alphabet and Meta did. Free cash flow remained $19 billion for the quarter, reflecting stronger financial discipline than some competitors. Microsoft shares had fallen about 18% cumulatively during the year as the market repeatedly questioned the company's AI strategy. The latest earnings report, supported by strong cloud growth, a clearer path to monetization and disciplined spending, helped restore investor confidence. The technology sector rebounded broadly Thursday, with the index surging 2.8% and semiconductor stocks gaining more than 8%.
The remarkable performance followed Microsoft's fiscal 2026 fourth-quarter earnings report, released after Wednesday's close, which exceeded expectations across the board and eased concerns that the company's massive artificial-intelligence investments would be difficult to monetize.
Microsoft reported quarterly revenue of $90 billion, up 18% from a year earlier and above the market expectation of $87.7 billion. Adjusted earnings per share rose 23% year over year to $4.74, far exceeding the $4.25 expectation.
Revenue from Azure, the company's cloud business, rose 43% year over year, marking its fastest quarterly growth since early 2022. Full-year revenue surpassed $100 billion for the first time. Microsoft expects Azure growth to accelerate further to 45% in the next quarter.
Paid seats for Microsoft 365 Copilot exceeded 30 million, up sharply from 20 million in the previous quarter, indicating that adoption of enterprise AI tools is accelerating. Commercial remaining performance obligations, a measure of future revenue, increased by $51 billion from the previous quarter to $678 billion, pointing to strong long-term customer commitments.
Investors were also encouraged by Microsoft's restraint on capital spending. Capital expenditures totaled $41 billion for the quarter, below the $42 billion expectation. The company expects fiscal 2027 capital expenditures of about $175 billion, down from its previous estimate of $190 billion, and did not sharply raise its spending guidance as Alphabet and Meta did.
Free cash flow remained $19 billion for the quarter, reflecting stronger financial discipline than some competitors.
Microsoft shares had fallen about 18% cumulatively during the year as the market repeatedly questioned the company's AI strategy. The latest earnings report, supported by strong cloud growth, a clearer path to monetization and disciplined spending, helped restore investor confidence. The technology sector rebounded broadly Thursday, with the index surging 2.8% and semiconductor stocks gaining more than 8%.