Microsoft's stock rallied sharply on Thursday, climbing over 16% after the company signaled it will continue to generate cash into its new fiscal year and delivered cloud growth guidance that outpaced analysts' expectations. The one-day surge, if it holds through market close, would add in excess of $485 billion to the company's market value, topping the previous single-day addition of $441 billion recorded by Nvidia on April 9, 2025, according to LSEG data.
Investors reacted to guidance for Azure and to commentary about the payoff from recent artificial intelligence investments. In its outlook for the first quarter, Microsoft projected Azure revenue growth of 45% on a constant currency basis, notably above the Visible Alpha consensus estimate of 40.92% for the period.
Market participants pointed to the results as evidence that spending on AI infrastructure and data centers may be translating into stronger revenue. "Microsoft reported a very strong quarter and it struck the tone markets are looking to hear as the key drivers of growth came from the cloud and AI divisions," said Brian Mulberry, chief market strategist at Zacks Investment Management.
Despite the rally, Microsoft had lagged several of its large-cap peers earlier in the year; the stock was down more than 18% through Wednesday's close. The fresh data and guidance prompted at least nine brokerages to raise price targets, bringing the mean target price to $560.90.
Executives emphasized that the company's spending plans remain in place. Management reiterated capital expenditure expectations of $50 billion for the fiscal first quarter of 2027 and $175 billion for the 2026 calendar year, underscoring continued sizable investment in computing and data center infrastructure.
Direxion's head of capital markets, Jake Behan, framed the update in terms of the narrative shift investors seek: "The key question was whether it could shift the conversation from how much it is spending on AI to what it is earning from those investments, and the results suggested meaningful progress."
Analysts and investors will be watching whether the strong intraday move holds and how the company translates elevated investment levels into sustained revenue and cash flow over the coming quarters.
Context and market data cited:
- One-day share increase: more than 16%
- Potential market-value addition: more than $485 billion
- Previous single-day record: $441 billion by Nvidia on April 9, 2025 (LSEG)
- Azure growth guidance: 45% (constant currency)
- Visible Alpha analyst estimate for Azure: 40.92%
- Capital expenditure expectations: $50 billion (fiscal Q1 2027), $175 billion (2026 calendar year)
- Stock performance year-to-date through Wednesday: down more than 18%
- Brokerage target mean after the results: $560.90