Key Takeaways for Microsoft Stock as of July 2026
- Clean Top-Line Beat: Revenue hit $90.01 billion, clearing the $87.63 billion Street estimate by near 3%.
- Azure Broke Out: 43% growth in Azure and other cloud services revenue was the single largest driver of the quarter’s outperformance, as customer demand kept exceeding available data center capacity.
- Accelerating Cloud Guide: Management guided Q1 Azure growth to ~45% in constant currency and total revenue of $89.85B to $90.95B, up 16% to 17%, while quarterly CapEx is set to top $50B.
- Capacity Race: CEO Satya Nadella said Microsoft added a gigawatt of data center capacity this quarter alone and remains on track to double its overall footprint within two years.
Microsoft Stock Beats Everywhere, But Azure’s Growth Is Costing Margin
Microsoft Corporation (MSFT) closed its fiscal 2026 with a fourth quarter that topped nearly every headline number Wall Street tracks, posting revenue of $90.01 billion on July 29, 2026, 2.71% ahead of the $87.63 billion Street estimate and up 17.75% year over year. Adjusted earnings per share came in at $4.74, clearing consensus by 11.81% and up 29.86% from the $3.65 posted a year earlier, while net income jumped 29.57% to $35.29 billion. Behind that strength sat Azure, Microsoft’s cloud computing platform, which grew 43% and pushed Intelligent Cloud segment revenue up 32% to $39.3 billion.
Some of that beat was borrowed. A $3.2 billion gain on Microsoft’s investment in Anthropic and lighter-than-expected severance costs added $0.27 to diluted EPS, a benefit partly offset by Xbox impairment charges. Strip that out and a real tradeoff remains: consolidated gross margin fell to 67% year over year, and EBITDA of $51.63 billion actually missed the Street’s $51.73 billion estimate by 0.20%, with EBITDA margin down 220 basis points to 57.36% as AI infrastructure spending and rising GPU usage costs bit into Microsoft Cloud gross margin, which slipped to 65%.
CFO Amy Hood explained Azure’s acceleration on the Q4 earnings call as a function of capacity efficiency: “Because of the supply-demand imbalance we’ve been talking about, when we can make efficiency gains, they are quickly monetized in quarter.” That dynamic, in her telling, is why Azure beat expectations this quarter: efficiency gains across the CPU and GPU fleet, plus a stronger lift from GitHub Copilot’s June shift to usage-based billing, converted into revenue almost immediately.
Commercial remaining performance obligation, the contracted revenue Microsoft has booked but not yet recognized, jumped 84% to $678 billion, with growth outside frontier model companies like OpenAI still accounting for 25% of that expansion. Microsoft 365 Copilot backed up that durability with over 30 million paid seats, doubling net seat additions from the prior quarter as premium tiers like E5 and the newly launched E7 suite lifted revenue per user.
Guidance leans into the same tension. Management guided first-quarter fiscal 2027 Azure growth to 45% in constant currency and total revenue of $89.85 billion to $90.95 billion, up 16% to 17%, even as quarterly capital expenditures are set to top $50 billion. Microsoft also extended the useful life of its data centers and office buildings from 15 to 25 years starting fiscal 2027, trimming future depreciation and shifting new data center leases from finance to operating treatment, a change that adjusts its calendar 2026 capital spending outlook to $175 billion.
TIKR Values Microsoft Stock at $957, Pricing In Azure’s Buildout
TIKR’s mid case model values Microsoft at $957 by June 2031, implying a 145% total return from the current price of $391, or 20% annualized over 4.9 years.
A 20% annualized return over the next 4.9 years exceeds what investors typically expect from a company of Microsoft’s size, positioning Microsoft stock as one of the rare mega-cap names still pricing in double-digit compounding.
Microsoft’s Q4 print delivered exactly the tension in question: margins compressed and CapEx climbed just as capex-wary analysts warned, but Azure’s demand-supply gap widened and the backlog grew fast enough that the model still prices in outsized upside, confirming the stock’s discount is a multiple problem the market is applying rather than a business problem this quarter revealed.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
