Microsoft Beats Earnings Estimates as Azure Revenue Jumps 48%

Microsoft reported fiscal first quarter earnings per share of $4.89 on revenue of $92.28 billion, ahead of expectations for $4.73 and $90.63 billion. A year earlier, the company earned $4.13 per share on $77.6 billion in revenue. The stock slipped more than 1% in after hours trading, yet it later rose nearly 4% in premarket trading on Thursday as investors weighed the spending numbers.

Azure Growth Drives the Results

Azure was the standout, with revenue up 48% from a year ago to $33.17 billion, compared with $22.38 billion before. Cantor’s Thomas Blakey said better data center efficiency helped cloud growth even though capital spending came in lower than expected. Microsoft spent $45.2 billion on capital expenditures and finance leases, up 30% from last year but below the $50.67 billion analysts projected. Free cash flow fell 27% to $18.63 billion but stayed positive.

Analysts Raise Price Targets

Several firms lifted their targets after the report. TD Cowen’s Derrick Wood raised his fiscal 2027 Azure growth estimate from 43% to 48% and moved his target to $650 from $625. Citizens’ Patrick Walravens went to $625 from $550, noting that enterprise demand for Azure still exceeds supply, even though consumer revenue fell 3%. Cantor raised its target to $630 from $608, and BofA’s Tal Liani kept a Buy rating with a $630 target, up from $600. William Blair’s Jason Ader said the guidance supports the view that the AI trade is working across both infrastructure and applications.