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Microsoft Q4 Earnings Top Estimates on Cloud Momentum

· By Bernal Fintech Markets Desk

Microsoft reported fiscal Q4 2026 earnings that exceeded Wall Street expectations, driven by robust cloud growth and continued momentum in artificial intelligence (AI) services. The company reported revenue of $90 billion for the quarter, up 18% from the prior year and surpassing analyst forecasts of $87.6 billion. Shares rose about 3.5% in extended trading following the results.

Microsoft’s cloud business, particularly Azure, saw stronger-than-expected growth, with full-year Azure revenue surpassing $100 billion. The company also highlighted the rising adoption of its AI products, including Microsoft 365 Copilot, which contributed to improved performance. The CFO’s internal memo emphasized that Microsoft’s biggest AI bets are paying off, with important progress in key areas such as Azure and AI integration across its ecosystem.

Cloud and AI Drive Performance

Microsoft’s cloud revenue grew by 27% year-over-year, with Azure continuing to outperform expectations. The company’s AI initiatives, including Copilot and other AI tools, have seen increasing adoption across enterprise and consumer segments. This has helped offset concerns over the company’s significant spending on AI infrastructure, as the returns from these investments are beginning to materialize.

The company’s backlog also increased by 8% compared to the previous quarter, driven by contributions from customers beyond large AI firms. This indicates broad-based demand for Microsoft’s cloud services and AI offerings, reinforcing the company’s position as a leader in the tech sector.

What it means for markets

Microsoft’s strong Q4 results and continued cloud momentum are likely to bolster investor confidence in the tech sector. The company’s ability to deliver consistent revenue growth and scale its AI offerings could further solidify its market leadership and support broader market sentiment in the technology space.

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