Microsoft shares surged more than 15 percent in early trading Thursday after the company reported fourth-quarter earnings that beat Wall Street estimates on both revenue and profit, driven by record performance from its Azure cloud computing service.
Azure topped $100 billion in revenue for the first time in a single quarter, according to Yahoo Finance. The company's Intelligent Cloud segment posted revenue of $39.3 billion, ahead of analyst expectations of $38.1 billion.
The results offered relief to investors who had been watching closely to see whether Microsoft's heavy spending on artificial intelligence infrastructure was translating into revenue growth. The company spent $41 billion on capital expenditures, including leases, in the quarter, coming in below the $42 billion that analysts had anticipated. Microsoft also said its capital spending plans for 2026 were unchanged.
The contrast with a rival was sharp. Last week, Google parent Alphabet said it plans to spend between $195 billion and $205 billion on capital expenditures for the year, up from a prior estimate of $180 billion to $190 billion and well above analyst expectations of $186.4 billion. That announcement sent Alphabet stock down more than 6 percent on the day.
Microsoft's ability to beat on revenue while holding capital spending below estimates appeared to reassure investors that the company's AI investments are producing results. Concerns about whether aggressive infrastructure spending was hurting free cash flow had weighed on the stock for much of the year. Entering Thursday, Microsoft shares were down 19 percent year to date, making the post-earnings jump significant even if it did not fully close that gap.
The strong quarter from Microsoft adds to a broader set of results from major technology companies that investors are using to judge whether AI spending across the industry is justified. The answer, at least for Microsoft, appeared to satisfy the market Thursday morning.
