Microsoft (MSFT) beat fiscal first-quarter earnings expectations, driven by strong growth in its Azure cloud business. Yahoo Finance's Brian Sozzi breaks down what is driving Microsoft's momentum and why it stands out as Alphabet (GOOGL, GOOG) pulls back.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on Yahoo Finance ↗
Keywords
MSFTcloud computingearningsartificial intelligence
Open a keyword to see other news on the same topic.
Related tickers and likely impact
MSFT
▲ Likely positiveMicrosoft
Relevance: high
| Market | US stocks |
|---|---|
| Sector | Information Technology |
| Industry | Systems Software |
| Market cap | $3.9T |
| Close on 10/28/2026 | 530.83 |
| Change that session | -0.09% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- Satya Nadella Says Renting AI Capacity to a Few Big Customers Is “Not a Business”
In its October 28, 2026 earnings call, Satya Nadella said serving about 4 large customers that buy heavy capacity, even with several quarters of growth, is “not a business” as far as he is concerned. Microsoft reported revenue of $92.3 billion, up 19%, with Azure up 48%, and shares rose 2.90% to $546.39 after hours. Nadella said Microsoft is open to selling capacity to large buyers “as long as the pricing is right,” while favoring enterprise customers running recurring workflows. Capex of $45.2 billion came in below Amy Hood's guidance of over $50 billion because some third-party capacity deliveries were delayed, while demand still exceeded supply. Commercial remaining performance obligation rose 73% to $677 billion, and OpenAI contributed $10.0 billion, about 10.8% of revenue.
- Why Is Microsoft Stock Rising 4% in Premarket Trading?
Microsoft (NASDAQ: MSFT) shares rose 4.0% in premarket trading on Thursday after fiscal first-quarter 2027 revenue and earnings beat Wall Street expectations, driven by growth in its Azure cloud business. For the quarter ended September 30, 2026, revenue rose 19% to $92.3 billion and GAAP diluted EPS climbed 32% to $4.92. Azure revenue grew 48% year over year to $33.2 billion, above the previous guidance of about 44% to 45% and analyst forecasts, and Microsoft projected Azure growth of 49% to 50% for the December quarter. Commercial backlog reached $677 billion, up 73%. Barclays raised its price target to $610 from $600 and kept its Overweight rating, while CEO Satya Nadella said daily Copilot users rose 50% from a year earlier.
- Alphabet and Microsoft are on both sides of the AI boom's biggest bills: Chart of the Day
Microsoft and Alphabet both rent computing power to AI labs and hold stakes in them, but this quarter Microsoft gained while Alphabet lost: Microsoft shares rose about 2% after hours, while Alphabet fell nearly 10%. OpenAI paid Microsoft $10 billion in the quarter ended September, about 11% of its $92 billion revenue, but unpaid OpenAI bills rose to about $7 billion and Microsoft's backlog slipped to about $677 billion. Alphabet's holdings, including about 14% of Anthropic and a stake in SpaceX, produced a nearly $9 billion loss that cut earnings by $0.55 a share to $2.12. Alphabet spent $51 billion on data centers and equipment and burned about $9 billion in free cash flow for a second straight quarter, funding the gap with $29 billion of bonds and $12 billion of new shares. Google Cloud revenue doubled to about $31 billion, and its backlog rose to $561 billion from $514 billion.
- Microsoft (MSFT) Q1 2027 Earnings Call Transcript
Microsoft reported first quarter 2027 revenue of $92.3 billion, up 19%, with Microsoft Cloud revenue reaching $63.9 billion (up 30%) and Azure growing 48%. Non-GAAP EPS was $4.89, up 18%, and cash flow from operations rose 29% to $58 billion. Commercial remaining performance obligation reached $677 billion, up 73%, while capital expenditures totaled $45.2 billion, with 75% allocated to short-lived assets such as CPUs and GPUs for AI infrastructure. Management said demand for AI services still exceeds available supply and projected second-quarter revenue of $96 billion to $97.1 billion and capex of over $50 billion. Windows OEM revenue fell 27% due to partner inventory drawdowns and weaker PC demand, and some third-party capacity deliveries were delayed.
- What Microsoft (MSFT) Said on Its Q1 Earnings Call
Microsoft (MSFT) reported first-quarter fiscal 2027 revenue of $92.3 billion, up 19% year over year, with EPS rising 18% to $4.89. Microsoft Cloud revenue reached $63.9 billion, up 30%, while Azure grew 48% and Foundry revenue more than tripled, with Foundry customers exceeding 120,000. CFO Amy Hood said demand still exceeds available capacity, and daily Copilot users rose nearly 50% from the prior quarter. Capital expenditures were $45.2 billion in the quarter and are expected to exceed $50 billion in the second quarter, with calendar-year spending around $170 billion. For the second quarter, Microsoft forecast total revenue growth of 18%–19% and Azure growth of 49%–50% in constant currency.
- Microsoft's strong quarter backs up its stock rebound. Here's our new price target
Microsoft shares edged higher after the company reported better-than-expected results across all key metrics, with Azure growth accelerating. Revenue for the quarter ended in September rose about 19% year over year to $92.28 billion, above the LSEG consensus of $90.69 billion, while adjusted EPS of $4.92 rose 32%, beating the $4.73 consensus. Azure revenue grew 48% to $33.17 billion from $22.38 billion a year earlier, ahead of FactSet estimates of about 44% and 45%. Capital expenditures of $45.2 billion came in below the $51 billion analysts had forecast and the $50 billion projected by management, partly due to delays in third-party capacity deliveries. The stock has gained roughly 51% from its late-June low through Wednesday's close and was up about 3% after hours.
Related markets
Latest news
- Want Decades of Passive Income? 3 Energy Stocks to Buy Right Now, Starting With Energy Transfer.
The article argues dividend stocks can play a major role in long-term investor returns, citing Hartford Funds and Ned Davis Research findings that reinvested dividends account for 85% of the S&P 500's cumulative return since 1960. It highlights three energy stocks: Energy Transfer (ET), Enbridge (ENB) and ExxonMobil (XOM). Energy Transfer operates over 140,000 miles of pipeline across 44 states, with 90% of its projected earnings this year coming from long-term, fee-based contracts, and a 6.6% distribution yield. Enbridge has raised its dividend for 31 consecutive years and returned 38 billion Canadian dollars to shareholders over the past 5 years. ExxonMobil has grown its dividend for 43 years, with breakeven costs of about $40 per barrel on its advantaged assets and a goal of lowering costs to $30 per barrel by 2030.
- Pictured: Nvidia boss ‘targeted by Chinese spy’
According to US intelligence officials, Nvidia CEO Jensen Huang was courted by Alice Huang, a senior executive at Singapore-based Megaspeed, whom US officials believe passed information to Chinese intelligence agencies. The New York Times reported that Donald Trump was briefed on the matter, and Jensen Huang has been photographed with Alice Huang at events in Taiwan. A report by short-seller Culper described the two as “very close,” while Nvidia said the interactions were “not unusual or unexpected.” Megaspeed is one of Nvidia's biggest Asian customers, and officials are investigating whether it helped Chinese companies evade US chip export controls; Nvidia says those claims were “thoroughly investigated and debunked.” In January, Trump partially reversed the export ban, allowing sales of less powerful Nvidia AI chips while imposing a 25% tariff on sales to Chinese customers.
- Why Did Honeywell Aerospace Stock Drop on Thursday?
Honeywell Aerospace (HONA) shares fell 10.5% by 10:30 a.m. ET Thursday, despite beating Q3 expectations with earnings of $2.21 per share on more than $4.6 billion in sales, versus analyst forecasts of $1.86 per share. Sales rose only 2% year over year and net profit 1%, though commercial original equipment sales grew 7% on higher aircraft production, a segment that is its smallest. Commercial aftermarket sales grew 2%, while defense and space grew 1%. The company has won more than $20 billion in new contracts this year, a book-to-bill ratio of about 1.5x, but its annualized free cash flow is only about $2.6 billion. At 20x free cash flow, the article argues Honeywell needs to grow faster to justify its premium valuation.
- Walmart Blocks Its Stock From OKX-ICE Tokenized Trading Venue
Walmart, Eli Lilly, Cigna Group, Carnival and Arcos Dorados have objected to their shares being offered on OKXICE TSV, raising the total number of objecting companies to 38 from nine initially and extending the pushback into retail, health care and travel. Under the SEC's innovation exemption, if a company objects in writing within 30 days, the venue cannot make a tokenized version of its stock available for trading. OKXICE TSV, a 50-50 joint venture of Intercontinental Exchange and OKX, plans to let approved users trade tokenized U.S. stocks 24/7 on the XLayer blockchain; the exemption caps it at 75 of the largest stocks, limited to 0.25% of each stock's average daily volume, and up to 250 others at 2.5%. Major names such as Nvidia, Tesla, Apple and Amazon have not objected yet, so the list may still change.
- Amazon Earnings Prediction Market Preview: What Will Andy Jassy Say?
Amazon.com Inc. (NASDAQ:AMZN) will report third-quarter earnings after the market closes Thursday, as investors question its $220 billion capital spending plan. Analysts expect earnings of $1.97 per share on revenue of $202.2 billion, up 12%.
- ServiceNow shares plunge 24% after earnings revive AI disruption fears
ServiceNow shares fell 24% on Thursday, heading for their worst day ever, after third-quarter results revived fears that AI could disrupt traditional software business models. Revenue rose more than 20% to $4.11 billion, roughly in line with the $4.10 billion estimate, while adjusted EPS of $1.00 fell short of the $1.02 forecast. The company slightly lifted its 2026 subscription revenue outlook to between $15.78 billion and $15.79 billion, and net new AI average contract value jumped 65%. Citi's Tyler Radke said investors wanted quicker payoffs from the newly formed forward-deployed engineering team and that the inflection may not come until next year.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.