Microsoft Q4 revenues beat forecasts as Azure growth accelerates

(Sharecast News) - Software giant Microsoft shares ticked higher in afterhours trade on Wednesday as it posted another strong quarter and set out plans for steady capital spending through 2026.

Adjusted earnings per share came in at $4.74, while revenues rose 18% yearonyear to $90.01bn, ahead of the $87.62bn expected on the Street. Net income climbed to $35.77bn, helped by a $3.2bn gain from Microsoft's Anthropic investment and lowerthananticipated costs from its voluntary retirement programme.

Commercial remaining performance obligations increased 8% sequentially to $678bn, driven by nonAI enterprise commitments, while quarterly capex and finance leases surged 69% to $41bn.

Intelligent cloud revenue rose 31.6% to $39.31bn, above consensus, while Azure growth accelerated to 43%, exceeding $100bn for the first time FY26, keeping it ahead of Google Cloud but still behind AWS.

Productivity and business processes revenues grew 14.3% to $37.85bn, while More Personal Computing fell 4.4% to $12.85bn, Windows OEM revenue dropped 7% and Xbox revenues fell 10% following recent restructuring.

Chief financial officer Amy Hood reiterated Microsoft's FY26 spending plans, but said Microsoft will extend the useful life of office and datacentre buildings to 25 years and shift more future datacentre leases to operating leases. The changes imply around $175bn in capex and finance leases for 2026, with further growth expected in 2027. Free cash flow fell 23% to $19.64bn, though Hood said she expects positive free cash flow in FY27

Microsoft also issued firstquarter revenue guidance of $89.85bn to $90.95bn, pointing to 16% growth at the midpoint. Hood projected 45% Azure growth for Q1.

As of 1130 BST, Microsoft shares were up 8.88% in pre-market action at $425.21 each.

Reporting by Iain Gilbert at Sharecast.com