Microsoft’s stock rises 9% on strong Azure revenue growth and steady capex spending
Microsoft Corp.’s stock was trading 9% higher in the after-hours session today after reporting four-quarter earnings and revenue that surpassed Wall Street’s expectations while reiterating its capital expenditures forecast for the rest of the year.
The company reported earnings before certain costs such as stock compensation of $4.74 per share, beating the Street’s projection of $4.24 per share, but there was a caveat to those results. The figure includes 27 cents of unusual accounting benefits mostly derived from a $3.2 billion unrealized gain on Microsoft’s investment in Anthropic PBC. During the quarter, Anthropic’s valuation jumped from $350 billion to $900 billion.
The company also reported revenue of $90.01 billion, up 18% from a year earlier and above the Street’s target of $87.62 billion. All told, it delivered net income of $35.77 billion in the quarter, up from $27.23 billion in the year-ago period.
Microsoft’s stock is still down 19% in the year to date, trailing the broader S&P 500 index, which has gained around 7% so far this year. Investors have put software stocks under pressure this year amid fears of disruption caused by artificial intelligence agents. At the same time, Microsoft also faces some “concentration risk” stemming from its close relationship with OpenAI Group PBC and the rise of open-source AI models, said analysts from Deutsche Bank in a note earlier this week. Last January, Microsoft revealed that around $45 billion of its $625 billion in commercial remaining performance obligations were tied to OpenAI’s future success.
