Microsoft Surges 9% as Azure Tops $100B and Q4 Beat Lifts Most Price Targets
Microsoft Surges 9% as Azure Tops $100B and Q4 Beat Lifts Most Price Targets
David MoadelThu, July 30, 2026 at 1:06 PM UTC
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Microsoft's Azure crossed $100B in annual revenue for the first time, growing 43%, as Microsoft posted Q4 EPS of $4.81, up 32%, topping Wall Street estimates.
NVIDIA stands as a key beneficiary as Microsoft committed to continued GPU investment while capex of $41B came in below the $42B feared by analysts.
Previously, GOOGL dropped 6% after Alphabet's Google raised its capex outlook to $205B, making Microsoft's spending restraint the clearest market reward of the earnings season.
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Shares of Microsoft (NASDAQ:MSFT) 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.
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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
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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.
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Contact editorial@247wallst.com for any questions or corrections.
Source: “AOL Money”
