Microsoft's market capitalization saw a historical increase of over $450 billion after the company announced impressive fourth-quarter results that surpassed analyst expectations. This surge propelled its stock up by more than 8% in extended trading, making it one of the largest single-day market value jumps ever recorded. The strong performance was largely attributed to robust demand for its cloud and artificial intelligence offerings.
For the fiscal fourth quarter, Microsoft reported revenue of $90 billion, an 18% year-over-year increase, beating the LSEG estimate of $87.62 billion. Its adjusted earnings per share reached $4.81, significantly higher than the $4.24 consensus. The company's Azure cloud-computing business revenue grew by 43%, exceeding analyst estimates of 39.98% from Visible Alpha. Microsoft also noted that Azure's annual revenue surpassed $100 billion for the first time in fiscal 2026.
Looking ahead, Microsoft forecast a fiscal 2027 first-quarter sales midpoint of $90.4 billion, surpassing estimates of $89.66 billion. Azure growth is projected at 45% on a constant currency basis, well above analyst estimates of 40.92%. Despite an accounting change that reclassified data center leases and lowered its calendar 2026 capital expenditure forecast to $175 billion from a previous $190 billion, the company emphasized that its underlying investment plans remain unchanged.
Microsoft's free cash flow for the fiscal 2026 fourth quarter was $19.6 billion, outperforming analyst estimates of $13.44 billion, though it was down 23% from the previous year. The company's cloud contracted backlog also grew to $678 billion, with approximately $50 billion in new commitments coming from non-leading U.S. AI model makers. Amidst concerns about AI overcapacity, CFO Amy Hood stated that Microsoft has the flexibility to adjust server purchases based on cloud demand, dismissing those concerns.
