Microsoft (MSFT): What’s Behind the Stock’s 15% Rally Today

Shares in Microsoft (MSFT) stock climbed as much as 15% on Thursday, leading tech stocks higher on the day. The Windows developer posted its Q4 earnings report after Wednesday’s bell, revealing earnings that far exceeded Wall Street expectations. Not only did earnings beat estimates, but the company’s capital expenditure also fell below estimates, sending the stock into a bullish rally Thursday.

Microsoft said Overall revenue rose 18% to $90 billion, topping expectations of $87.7 billion, while adjusted earnings of $4.74 per share beat forecasts of $4.25. Operating income climbed to $40.6 billion. For Microsoft Azure specifically, its revenue jumped 43% last quarter, its fastest growth in four years and well ahead of the roughly 40% Wall Street expected.

In addition, Microsoft said it spent $41 billion on capital expenditures, including leases, in the quarter, below the anticipated $42 billion. As big tech giants continue to splash billions into AI infrastructure and development, Wall Street has often warned that the increased dedictation to AI could be a bubble that bursts eventually. For Microsoft, it’s extremely optimistic according to analysts that even with spending on AI going down, Microsoft’s AI platform is still trending upward in revenue.

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