The company reported 43% growth in Azure, its key cloud computing business, ahead of market expectations. Microsoft also said it now has more than 30 million paid seats for Microsoft 365 Copilot, its AI-powered workplace assistant, up from more than 20 million as of April, indicating growing adoption of its artificial intelligence offerings.
“Microsoft’s strong revenue performance, combined with accelerating Copilot adoption, signals that its $190 billion data-centre buildout is beginning to deliver returns,” Tracy Woo, Principal Analyst at Forrester, said in a note on Wednesday.
The stock was on track for its best day since March 13, 2020, when it gained 18.6%. Meanwhile, Meta shares fell 9%, as investors delivered contrasting reactions to the earnings reports of the two technology giants.
Microsoft reported revenue of $90.01 billion for the fourth quarter of fiscal 2026, higher than expectations of $87.62 billion, while its Earnings Per Share (EPS) stood at $4.74 on an adjusted basis. Revenue growth on a year-on-year basis stood at 18%.
For the new fiscal 2027, Microsoft said that although capex remains at $175 billion, there could be growth based on demand signals across their portfolio. The company will also lengthen the useful life of office and data center buildings to 25 from 15 years earlier.
Free cash flow for the quarter dropped 23% to $19.64 billion, but CFO Amy Hood said that Microsoft will remain free cash flow positive in the new fiscal.
Microsoft has guided for revenue to be between $89.95 billion to $90.95 billion in the first quarter, which will imply a growth of 16% from last year, but slower than the fourth quarter. The figure though, was higher than the consensus expectation of $89.66 billion.Azure, the company’s cloud business saw revenue exceed $100 billion for the full fiscal for the first time, growing by 41% from last year. The business still is smaller than Amazon Web Service but larger than Alphabet’s Google Cloud.
For the first quarter, Azure will grow 45%, according to CFO Hood, higher than street expectations of 41.4%. During the quarter, Azure revenue stood at $39.31 billion, up 31.6% from last year, and higher than estimates of $38.16 billion.
Microsoft 365 Copilot work assistant had over 30 million paid seats at the end of the quarter, up from over 20 million in April.
Shares of Microsoft closed extended trade 8.9% higher at $425.21. As of closing of regular trading on Wednesday, the stock was down 17% so far for 2026.
