Source: Fortune
Summary
Microsoft’s stock surged 17% on Thursday, the largest single-day gain since 2008, after the company’s fourth-quarter results exceeded analyst expectations. Revenue hit $90 billion, with earnings per share at $4.74, and Azure revenue crossed $100 billion for the first time. CEO Satya Nadella and CFO Amy Hood’s strategy for converting AI spending into revenue growth appears to be working. OpenAI contributed $24.1 billion in fiscal 2026 revenue, with Azure’s growth expected to remain above 40%.
Our Reading
The numbers tell one story.
Microsoft’s stock price surged after the company’s strong quarterly results, with Azure’s revenue growth exceeding expectations. The company’s strategy for converting AI spending into revenue growth appears to be working, with OpenAI contributing significantly to Azure’s growth. The announcement sounds like a familiar narrative of a company finally convincing investors of its growth potential.
Azure’s revenue growth is expected to remain above 40%, with OpenAI’s contribution to Azure’s revenue being less than a quarter. Microsoft’s capex growth is expected to slow down, with the company announcing an accounting change to extend the “useful life” of its data centers. The company’s free cash flow is expected to improve, making its headline numbers appear more palatable.
The situation can be reframed as: “Microsoft is finally showing the growth investors have been waiting for, but the question remains whether the company can sustain it.”
Author: Evan Null
