Microsoft (MSFT) Surpasses $516 on Earnings Explosion... "Puts AI Bubble Theory to Rest"

▲ Microsoft (MSFT), US stock market, tech stocks/AI generated image

Microsoft (MSFT) has firmly established its stock price above the $500 mark, driven by robust cloud and artificial intelligence (AI) performance. With annual Azure revenue surpassing $100 billion, AI investments are reportedly translating into tangible profits.

According to FXLeaders, a specialized foreign exchange and financial media outlet, on September 26 (local time), Microsoft's stock price closed at $516.17, up 3.66% from the previous trading day. Daily trading volume alone exceeded 38 million shares. Buoyed by the stock price increase, the total market capitalization expanded from $3.7 trillion to $3.8 trillion.

Improved earnings led the stock rebound. For the fourth quarter of the fiscal year, which ended on June 30, revenue increased by 18% year-over-year to $90 billion. Operating profit grew by 18% to $40.6 billion, and net income surged by 31% to $35.8 billion. For the entire fiscal year 2026, total revenue increased by 18% year-over-year to $331.8 billion, and annual net income rose by 31% to $133.7 billion.

The rapid growth of Azure, the cloud division, was particularly noteworthy. Cloud services revenue for the fourth quarter increased by 27% to $59.3 billion. Specifically, Azure and other cloud services revenue skyrocketed by 43%, pushing annual Azure revenue past the $100 billion milestone. Furthermore, the number of paid subscribers for Microsoft 365 Copilot exceeded 30 million, and future contracted revenue backlog (RPO) surged by 84% to $67.8 billion. Quarterly free cash flow also remained strong at $19.6 billion.

Aggressive capital expenditure was identified as a key market observation point. The company spent $41 billion in capital expenditure during the quarter alone to expand its AI data centers, an increase of over 70% year-over-year. Microsoft is focusing on improving efficiency by collaborating with major client OpenAI and simultaneously developing its own AI semiconductors and models. How quickly these massive investment costs will translate into profit growth remains a key issue.

Market attention is now focused on the upcoming release of next quarter's earnings results at the end of October. Investors are keenly interested to see if Azure's high growth and Copilot's paid conversion rate can drive further stock price increases, despite the burden of large capital expenditures.

[Article Key Summary]

-Microsoft (MSFT) stock closed at $516.17, up 3.66%, driven by strong cloud and AI performance.

-Azure's annual revenue surpassed $100 billion, and Copilot's paid subscribers exceeded 30 million.

-The speed of recovery for the massive $41 billion quarterly investment in AI data centers was identified as a future stock price variable.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*