TLDR
- Microsoft beat Q4 earnings expectations with $3.65 EPS vs $3.37 expected and $76.4B revenue vs $73.89B expected
- Stock surged 8.5% in premarket trading, positioning company to become second ever to reach $4 trillion market cap
- Azure cloud revenue grew 39% year-over-year, accelerating from 33% in previous quarter and beating 35% expectations
- Company expects double-digit revenue and operating income growth in fiscal 2026
- Capital expenditures hit $24 billion in Q4, with $30 billion expected for Q1 2026
Microsoft delivered a knockout punch to Wall Street expectations Wednesday night. The tech giant reported fourth-quarter earnings that sent its stock soaring 8.5% in premarket trading.
The company posted adjusted earnings of $3.65 per share on revenue of $76.4 billion. Analysts had penciled in earnings of $3.37 per share and revenue of $73.89 billion.
These numbers represent a substantial jump from the same quarter last year. Microsoft earned $2.95 per share on $64.72 billion in revenue during Q4 2024.
Microsoft, $MSFT, Q4-25. Results:
📊 Adj. EPS: $3.65 🟢
💰 Revenue: $76.4B 🟢
📈 Net Income: $27.2B
🔎 Microsoft Cloud hit $46.7B in revenue, fueled by Azure growth and strong demand across the stack. pic.twitter.com/GdZS8iXSEu— EarningsTime (@Earnings_Time) July 30, 2025
The premarket surge pushed Microsoft’s stock to $556.93. That puts the company within striking distance of a historic milestone.
Microsoft needs to hit $538.13 per share to reach a $4 trillion market capitalization. If current gains hold, Microsoft will join Nvidia as only the second company ever to achieve this valuation.
The earnings beat came largely from Microsoft’s cloud business. Azure revenue grew 39% year-over-year, accelerating from the previous quarter’s 33% growth rate.
Wall Street had expected Azure growth of 35%. The actual figure blew past those estimates.
Cloud Business Powers Growth
CEO Satya Nadella highlighted the cloud division’s performance. “This year, Azure surpassed $75 billion in revenue, up 34%, driven by growth across all workloads,” he said.
Total cloud revenue climbed 27% to $46.7 billion for the quarter. The Intelligent Cloud segment, which houses Azure, generated $29.8 billion in revenue against analyst expectations of $29.09 billion.
Microsoft still faces capacity constraints in its cloud business. “Demand continues to outstrip supply,” the company reported.
KeyBanc analyst Jackson Ader sees this as a positive sign. “There is potential for upside as this unlocks,” he wrote after upgrading Microsoft stock to Overweight with a $630 price target.
The cloud strength mirrors recent performance from Google. Alphabet’s cloud division also beat expectations in its latest quarter, suggesting strong demand across the sector.
Heavy AI Spending Continues
Microsoft’s capital expenditures reached $24 billion in the fourth quarter. That exceeded analyst estimates of $21.4 billion.
CFO Amy Hood announced even higher spending ahead. The company expects first-quarter capital expenditures of $30 billion.
This spending goes primarily toward AI infrastructure. Microsoft has been among the most aggressive tech companies in building out AI capabilities.
The company’s early investment in OpenAI has positioned it as an AI leader. However, the partnership faces some uncertainty as OpenAI considers restructuring its for-profit arm.
Hood provided some relief for investors concerned about runaway spending. She confirmed that capital expenditure growth will moderate in fiscal 2026 compared to fiscal 2025.
Strong Guidance for Fiscal 2026
Microsoft delivered encouraging forward-looking statements. Hood said the company expects double-digit revenue and operating income growth in fiscal 2026.
Wedbush analyst Dan Ives believes the real AI payoff lies ahead. He wrote that fiscal 2026 “remains the true inflection year of AI growth” for Microsoft.
BofA Global Research’s Brad Sills pointed to Microsoft’s AI-powered Copilot software as a potential growth catalyst. The tool could drive the next wave of revenue expansion.
The earnings report comes one week after Google posted strong cloud results. That company also announced an additional $10 billion in AI investments, bringing its yearly total to $85 billion.
James Ambrose, Microsoft’s director of investor relations, summed up the quarter’s performance. “We closed out our fiscal year 2025 with a strong quarter that exceeded expectations, driven by continued strong demand for our cloud and AI services.”
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