Microsoft (NASDAQ:MSFT) stock is slightly down today alongside the broader market, but that doesn’t stop Wall Street from applauding the company’s fiscal fourth-quarter results. The report reaffirmed that the AI boom remains a powerful tailwind – and Microsoft continues to ride that momentum with precision.
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Indeed, the numbers told a compelling story. Revenue surged to $76.4 billion, up 18% year-over-year, while topping both the company’s guide of $73.15 to $74.25 billion and beating the consensus estimate by $2.57 billion. The upside was fueled mainly by strong results in Intelligent Cloud, which generated $29.9 billion (up 26%), and Productivity and Business Processes, which brought in $33.1 billion (up 14%). Commercial bookings were also robust, exceeding $100 billion with a 30%cc increase vs. the year-ago period, boosted by large deals across both Azure and Microsoft 365. And despite ongoing investments, profitability held firm, with operating margin at 45%, as EPS came in at $3.65, beating expectations by $0.27.
That operational efficiency was even more impressive considering the rapid acceleration in Azure’s growth. Revenue for the cloud platform jumped 39%cc year-over-year, marking the second consecutive quarter of rising momentum and outperforming both guidance and Street estimates. Management emphasized that it’s not just AI workloads fueling the surge; core enterprise demand remains strong, particularly for data services and migrations.
Guidance for the current quarter only reinforced the bullish tone. Microsoft expects revenue between $74.7 billion and $75.8 billion, exceeding the consensus estimate of $74.15 billion. Azure is projected to grow 37%cc, well above the Street’s 33.7% forecast, reflecting continued strength across the company’s cloud offerings.
As for the whole of FY26, Microsoft anticipates that double-digit revenue and operating income growth will be on the menu again, while CapEx growth should slow down compared to FY25 as spending increasingly shifts toward shorter-lived assets such as GPUs and CPUs. Even so, management said on the call that investment will continue as needed to meet demand, with no clear end date in sight.
Jefferies’ Brent Thill – an analyst who ranks amongst the top 1% of Street stock experts – called Azure’s results a beat “against a high bar,” and pointed to strong momentum in commercial bookings. He also praised Microsoft’s ability to protect margins despite a “massive capex ramp,” calling out the better-than-expected 44.9% GAAP operating margin. Thill’s verdict: Microsoft is proving it can invest aggressively in AI while still delivering on profitability.
Thill backed that conviction with action. The analyst reiterated MSFT as a Top Pick, kept his Buy rating firmly in place, and lifted his price target to a new Street-high of $675 (up from $600). That new target suggests shares could climb another 26% from current levels. (To watch Thill’s track record, click here)
Thill is far from alone in boosting his price target; revisions have poured in across the Street, and the average price target now stands at $614.72, implying potential 12-month gains of ~18%. On the ratings front, with 33 Buys against just 2 Holds, the stock earns a Strong Buy consensus rating. (See MSFT stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.