Microsoft Stock Surges on Azure and AI Growth

Microsoft stock climbed about 37%, from roughly $372 in late June to near $509 by late September 2026, following the company’s 29 July fiscal fourth-quarter results. The gain put Microsoft stock on track for its strongest quarterly performance since 1998. Microsoft reported $90 billion in revenue, up 18% year on year, and GAAP net income of $35.8 billion, up 31%. Azure revenue rose 43%, ahead of expectations near 40%, while annual Azure revenue surpassed $100 billion for the first time. Microsoft’s broader commercial cloud business generated $59.3 billion, up 27%. The results triggered a roughly 15% to 16% one-day jump in Microsoft stock and added about $450 billion to its market value. Commercial backlog reached a record $678 billion. Microsoft 365 Copilot also exceeded 30 million paid seats. Microsoft maintained annual capital expenditure guidance of $175 billion for data centres and AI infrastructure. Capital spending is supporting Azure and artificial intelligence growth, although it is weighing on cloud gross margins. Management expects Azure growth of about 45% in the next quarter and has indicated that infrastructure capacity, rather than weak demand, is limiting some expansion. The main trading risks are whether Azure can meet its forecast, whether Copilot monetisation will justify heavy AI spending, and whether margins can recover. After the sharp rally, valuation has become less attractive, prompting at least one analyst to downgrade Microsoft from Buy to Hold. The strong results also increase competitive pressure on Amazon Web Services and Google Cloud.