Microsoft shares rose more than 8% in extended trading after the company delivered stronger-than-expected cloud growth and said it expects to keep generating cash from its AI investments.
Azure revenue increased 43% in the fiscal fourth quarter ended June 30, ahead of the 39.98% analyst estimate. Microsoft forecast Azure growth of 45% for its fiscal 2027 first quarter, compared with expectations of 40.92%.
The company projected first-quarter sales of $90.4 billion at the midpoint, above the $89.66 billion analyst estimate. Overall quarterly revenue rose 18% to $90 billion, while adjusted earnings per share reached $4.74, beating expectations of $4.24.
Microsoft forecast reported capital expenditure of $50 billion for the first quarter and $175 billion for calendar 2026. Both figures were below earlier market expectations, partly because the company will spread data center lease costs over 25 years instead of 15. Microsoft said its underlying spending plans have not changed.
Free cash flow reached $19.6 billion in the quarter, above estimates, although it fell 23% year on year. The company also reported a cloud backlog of $678 billion and more than 30 million paid M365 Copilot seats.
CEO Satya Nadella said Microsoft is developing its own AI models and chips while giving customers more choice based on cost and performance, according to the announcement.
Source: Zawya
