Microsoft Stock Rises on Earnings Beat, Azure Revenue Up 48% YoY

Microsoft Corporation (NASDAQ: MSFT) shares rose about 1% to $535.11 in Thursday’s premarket trading after the company reported better-than-expected quarterly earnings and revenue, supported by accelerating growth in its Azure cloud business.

The technology giant reported adjusted earnings of $4.89 per share for its fiscal 2027 first quarter, exceeding analysts’ estimate of $4.72. Revenue rose 19% year over year to $92.28 billion, beating the consensus estimate of $90.61 billion.

Adjusted earnings per share increased 18% year over year. On a GAAP basis, Microsoft earned $4.92 per share, including the impact of its investments in OpenAI.

Azure Growth Accelerates as Microsoft Forecasts Further Gains

Azure revenue rose 48% year over year to $33.17 billion, up from 42% growth in the preceding quarter under Microsoft’s revised reporting basis, and exceeded analysts’ expectations. The broader Microsoft Cloud business, which includes Azure and other cloud services, generated $63.9 billion in revenue, up 30%.

Microsoft’s commercial remaining performance obligations, or contracted revenue not yet recognized, increased 73% year over year to $677 billion.

For its fiscal second quarter, Microsoft forecast Azure revenue growth of 49% to 50% year over year in constant currency, which excludes exchange-rate effects. That exceeded analysts’ 47.6% forecast.

The company also projected second-quarter revenue of $96 billion to $97.1 billion, above Wall Street’s estimate of approximately $95.6 billion.

Microsoft reported $45.2 billion in quarterly capital expenditures, including finance leases, compared with its approximately $50 billion projection. Chief Financial Officer Amy Hood attributed the shortfall to delays in deliveries of computing capacity from third-party providers.

Despite the lower-than-planned spending, Hood said capital expenditures would exceed $50 billion in the fiscal second quarter and were expected to accelerate during the second half of the fiscal year.

Separately, Microsoft has existing AI computing-capacity arrangements with Nebius and CoreWeave.

Operating cash flow reached $58 billion, up 29% year over year, while free cash flow totaled $18.6 billion, exceeding Visible Alpha’s estimate of $8.54 billion but declining about 27% from a year earlier.

Before Thursday’s premarket advance, Microsoft shares had closed at $531.01 on Wednesday following two consecutive regular-session declines. The stock had gained approximately 10.5% year to date through that close.

At the indicated premarket price, the shares remained about 2.9% below their 52-week intraday high of $551.15, reached on October 13.

Wall Street Raises Microsoft Price Targets Following Earnings

Several Wall Street firms increased their Microsoft price targets following the results while maintaining their existing ratings.

Wells Fargo raised its price target from $725 to $750 and maintained its Overweight rating. Bernstein SocGen Group raised its target from $662 to $722 and maintained its Outperform rating. Morgan Stanley also raised its target from $600 to $650 and maintained its Overweight rating.

Stifel raised its price target to $650 from $575 and maintained a Buy rating. Piper Sandler lifted its price target to $650 from $610 and maintained an Overweight rating, while Raymond James raised its price target to $650 from $630 and reiterated its Outperform rating.

Citizens lifted its target to $625 from $550 and maintained a Market Outperform rating. KeyBanc raised its target to $630 from $600 and retained an Overweight rating.

BMO Capital and Barclays each raised their targets to $610 from $600 and maintained their Outperform and Overweight ratings, respectively. Guggenheim raised its target to $595 from $586 and maintained a Buy rating.

Morgan Stanley cited Microsoft’s revenue growth, operating margins, and Azure performance as reasons for raising its price target. KeyBanc pointed to Azure expansion, Copilot-related revenue opportunities, and operating margins, while Bernstein highlighted cloud growth despite delays in additional computing capacity.

Separately, Microsoft Tokenized bStocks (MSFTB), a tokenized instrument distinct from Microsoft’s Nasdaq-listed shares, was trading at $535.50, up more than 1% over the preceding 24 hours, according to CoinMarketCap.