Microsoft Just Misses $4 Trillion Market Cap After Earnings. The Stock Is on Fire.

Microsoft released fourth-quarter earnings on Wednesday after the market closed. (Michael M. Santiago/Getty Images)

Microsoft stock surged on better-than-expected financial results for its latest quarter and strong guidance. The beat was driven in part by double-digit revenue growth in the tech firm’s closely watched Azure cloud business.

Microsoft posted adjusted earnings of $3.65 a share on revenue of $76.4 billion for the fiscal fourth quarter. Analysts surveyed by FactSet expected earnings of $3.37 a share on revenue of $73.9 billion. In the same period last year, Microsoft reported earnings of $2.95 a share on revenue of $64.7 billion.

Shares of Microsoft finished up 4% at $533.50, an all-time closing high, according to Dow Jones Market Data. Microsoft closed with a market cap of $3.966 trillion, just short of joining Nvidia and becoming the second company to close at a $4 trillion market cap.

Revenue for the Azure public-cloud business grew by 39% year over year, an acceleration from the third quarter’s 33% revenue growth. Analysts surveyed by FactSet expected Azure revenue growth of 35% in the quarter. For the year, Azure revenue surpassed $75 billion in revenue, up 34% from the previous year.

“Amazingly, Azure is still experiencing capacity constraints, and demand continues to outstrip supply, which means there is potential for upside as this unlocks,” wrote KeyBanc analyst Jackson Ader in a research note after the earnings report.

Ader raised his rating on Microsoft stock to Overweight from Standard Weight and put a price target of $630 on the stock.

Total cloud revenue rose 27% in the quarter from the previous year to $46.7 billion. The better-than-expected cloud performance comes after Alphabet Google Cloud revenue beat analyst estimates in the latest quarter.

Created with Highcharts 9.0.1Microsoft has surged this year,​outperforming the S&P 500 and Nasdaq.Source: FactSetAs of Aug. 1, 5:15 p.m. ET

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“We closed out our fiscal year 2025 with a strong quarter that significantly exceeded expectations, driven by continued strong demand for our cloud and AI services,” James Ambrose, director of Microsoft Investor Relations told Barron’s on Wednesday.

On top of reporting strong financials, Microsoft CFO Amy Hood said on the conference call that the company expects double-digit revenue and operating income growth in fiscal 2026.

Microsoft reported fourth-quarter capital expenditures of $24 billion, above estimates of $21.4 billion. Hood said that first-quarter capex is expected to be $30 billion.

Microsoft is among the largest tech companies that are spending billions to build AI infrastructure. The company said on its last earnings call that it expected spending to grow at a lower rate in fiscal year 2026 than it did in 2025. Hood confirmed to investors on Wednesday that capital expenditure growth will moderate compared with fiscal 2025.

Write to Angela Palumbo at angela.palumbo@dowjones.com