Microsoft’s Contracted Revenue Backlog Reaches $678 Billion

That wraps up our initial coverage of Microsoft’s Q4 results. Thank you for stopping by!

Microsoft spent $35.80 billion on property and equipment during fiscal Q4, more than double the $17.08 billion spent one year earlier. Full-year capital expenditures reached $115.95 billion, up nearly 80% from $64.55 billion in fiscal 2025.

The company still generated $55.44 billion in quarterly operating cash flow, up 30% year over year. However, subtracting property and equipment additions leaves $19.64 billion, down from roughly $25.57 billion last year.

That cash-flow pressure remains the central risk, but Azure’s 43% growth gives investors early evidence that Microsoft’s massive AI infrastructure buildout is generating a meaningful return.

Microsoft’s AI and cloud investments are translating into accelerating growth. Azure and other cloud services revenue increased 43% year over year during fiscal Q4, helping Intelligent Cloud revenue climb 32% to $39.31 billion.

CEO Satya Nadella revealed that Azure revenue surpassed $100 billion for the full fiscal year for the first time. Microsoft Cloud revenue reached $59.3 billion during Q4, up 27% year over year.

The results directly address concerns about Microsoft’s enormous AI spending. Azure growth exceeded the 39.6% analysts expected, helping send Microsoft shares up roughly 2% after the report.

Microsoft just reported fiscal Q4 earnings, with shares initially up 4% following the release. Here are the key numbers:

• Revenue: $90.01 billion vs. $87.72 billion expected
• Adjusted EPS: $4.74 vs. $4.25 expected
• Operating income: $40.60 billion vs. $39.02 billion expected
• Cloud revenue: $59.30 billion vs. $58.71 billion expected

Quick Read:

Microsoft delivered a broad beat, led by Azure and other cloud revenue growth of 43% in constant currency, well ahead of the 39.6% expected.

Intelligent Cloud revenue also reached $39.31 billion versus $38.17 billion expected, giving investors early evidence that Microsoft’s enormous AI spending is translating into stronger cloud growth.

Bull Case

• AI revenue is scaling fast: run rate hit $37B, up 123% YoY, with Azure growing 40% in Q3 FY26.
• Contracted backlog expanded to $627B in commercial RPO, and OpenAI committed $250B in incremental Azure spend.
• Polymarket assigns a 91.5% probability of a beat, and analysts carry a $557.25 target.

Bear Case

• Capex is surging: Q3 FY26 capex reached $30.88B, up 84% YoY, pressuring FY25 free cash flow to $71.6B, down 3.3%.
• Last quarter shares fell 3.93% despite a beat; Q2 FY26 dropped 9.99%.
• OpenAI investment losses widened to $3.1B in Q1 FY26, and insiders are net sellers.
• Shares are down 22.63% over one year, signaling fatigue with the capex narrative.

Microsoft (NASDAQ:MSFT) beat EPS in all five recent quarters yet still averaged a -1.05% move after earnings. Tonight’s stock reaction will hinge on forward guidance.

Management typically guides Azure conservatively at constant currency, then beats. Last quarter, CFO Amy Hood guided Q4 Azure growth of 39% to 40%, with capacity constrained through 2026 and calendar 2026 capex framed at roughly $190 billion.

Bullish signals: FY27 Azure guide at or above 40%, capex flat-to-modestly higher, AI run rate accelerating past $37 billion, and easing capacity commentary.

Bearish signals: Azure decelerating toward mid-30s, capex sharply higher without matching RPO growth beyond $627 billion, or margin caution.

Microsoft trades at $395.36 intraday, hugging its 50-day moving average of $398.54 but sitting well below the 200-day at $434.79. The stock has climbed 5.46% over the past month, yet remains 18.3% lower year-to-date.

Immediate support sits near the 52-week low of $349.20, with the $390.34 weekly floor acting as a nearer shelf. Resistance clusters at the 200-day, then the 52-week high of $551.05.

Options positioning skews bullish: the July 31 expiry shows 82,709 call contracts against 46,594 puts, a 1.78x volume ratio, with call open interest running 2.54x puts. Aug 21 holds the heaviest call OI at 595,302 contracts, signaling institutional bets on a sustained post-earnings move.

Last year, Microsoft delivered EPS of $3.65 on revenue of $76.44B. Prediction markets place 63% odds cloud revenue clears $58B and 61.5% odds capex tops $44B.

Key KPIs: Azure constant-currency growth (guided 39%-40%), the $37B AI run rate, $627B RPO, and any FY27 capex color against Amy Hood’s $190B calendar 2026 framework.

Microsoft (NASDAQ:MSFT) shares trade at $400.91, up 1.92% today. Full-chain put/call sits at 0.52. In Q2 FY26, MSFT dropped -9.99% on a beat, which serves as a warning that a beat alone might not send the stock higher. A miss on Azure or a capex step-up without accelerating RPO could trigger an outsized move.

This live blog is being updated by Thomas Richmond, a 24/7 Wall St. contributor. You’ll get expert analysis of Microsoft’s earnings.

Simply stay on this page, and new updates will appear below automatically. We expect Microsoft to release earnings shortly after 4:10 p.m. ET.

Microsoft reports fiscal Q4 2026 results after the bell, with Polymarket assigning a 94.5% probability of an earnings beat. Azure growth and the company’s $37 billion AI revenue run rate will anchor the report, but capex discipline may determine the market’s reaction.

Shares have fallen 22.63% over the past year, leaving Microsoft at a forward P/E of about 21.3x. Investors now want evidence that enormous infrastructure investments can translate into stronger cloud growth and free cash flow.

Polymarket currently assigns a 50.5% probability that the combined valuation of Anthropic and OpenAI will exceed Microsoft’s market value by the end of the year. Microsoft currently has a $2.9 trillion market cap, which would make this a tough hurdle to exceed.

A clean quarter with accelerating Azure growth and disciplined capex could reset the AI return narrative.