Microsoft shares jumped 7 percent in after-hours trading Wednesday after the company reported better-than-expected fiscal fourth-quarter results and outlined plans to boost capital spending, signaling sustained demand for its artificial intelligence products and cloud computing services.
The Redmond, Washington-based software giant posted revenue of 9.8 billion for the quarter ended June 30, up 16 percent year over year and ahead of analyst estimates of 8.5 billion. Net income rose to 4.5 billion, or .27 per share, compared with 1.3 billion, or .86 per share, in the same quarter a year ago.
Chief Executive Satya Nadella said Microsoft is seeing broad-based demand across its cloud portfolio, with enterprises accelerating adoption of AI-powered tools and services. Azure revenue grew 34 percent in the quarter, beating expectations, with AI services contributing an increasing share of that growth.
Microsoft said it expects capital expenditures to rise significantly in the new fiscal year as it invests in data center capacity, graphics processing units and AI infrastructure. The company told investors it is adjusting its accounting treatment for data centers and office buildings, which it said would improve reported free cash flow in the coming year.
The company forecast positive free cash flow for fiscal 2027 after the accounting change, a statement that reassured investors who had grown concerned about the escalating cost of Microsoft’s AI buildout. Free cash flow came in at 9.2 billion in the quarter, down from 1.4 billion a year earlier, reflecting the surge in infrastructure spending.
Microsoft’s commercial cloud revenue reached 8.5 billion, up 23 percent, driven by Azure, Microsoft 365 subscriptions and the Power Platform. The company’s AI-related revenue is on track to exceed an annualized run rate of 5 billion, executives said, making it one of the fastest-growing segments in the company’s history.
The results stand in contrast to rival Meta, which saw its shares fall sharply after disappointing guidance on Wednesday. Microsoft’s massive enterprise customer base and diversified revenue streams provide it with a more predictable growth trajectory, analysts noted.
LinkedIn revenue rose 12 percent, while Dynamics 365, the company’s customer relationship management software, grew 19 percent. Search and news advertising revenue, including the Bing search engine, also posted double-digit gains, helped by AI-powered search features.
The strong report lifted sentiment across the technology sector, with shares of other cloud and software companies rallying in sympathy. Microsoft shares have gained roughly 25 percent over the past 12 months, outperforming the broader market as investors bet on the company’s early lead in enterprise AI adoption.
Author: Pulse Of Nations Wire Desk
