TLDR
- Microsoft (MSFT) stock was up about 3% to 4% after hours and premarket after the company beat earnings and revenue expectations.
- Fiscal Q1 adjusted EPS was $4.89 on revenue of $92.3 billion, versus estimates of about $4.71 and $90.6 billion.
- Azure revenue grew 48%, ahead of the 44.3% analysts expected, and the company guided to 49% growth next quarter.
- Capital expenditures were $45.2 billion, below the $51 billion expected, and chip stocks fell in late trading.
- Free cash flow came in at $18.6 billion, above the $7.99 billion Wall Street expected.
Microsoft (MSFT) stock rose about 4.3% in after-hours trading Wednesday and was up 3.2% premarket Thursday, at $548.19. That compares with a close of $531.01 on October 28. The move came after the company reported results that beat on earnings, revenue and cloud growth.
For its fiscal first quarter, Microsoft posted adjusted earnings of $4.89 per share on revenue of $92.3 billion. Analysts had expected about $4.71 to $4.72 per share on revenue of roughly $90.6 billion.
Azure was the main draw. Revenue from the cloud unit rose 48%, beating the 44.3% analysts had penciled in. Azure passed $100 billion in annual revenue during fiscal 2026.
MICROSOFT $MSFT Q1’27 EARNINGS HIGHLIGHTS
🔹 Revenue: $92.3B (Est. $90.69B) 🟢; +19% YoY
🔹 Adj. EPS: $4.89 (Est. $4.73) 🟢; +18% YoY
🔹 Oper Income: $45.9B (Est. $44.06B) 🟢; +21% YoY
🔹 Adj. Net Income: $36.4B (Est. $35.13B) 🟢
🔹 Azure: $33.2B (Est. $32.32B) 🟢; +48% YoY
🔹… pic.twitter.com/8MgzggYDL4— Wall St Engine (@wallstengine) October 28, 2026
Microsoft Cloud revenue climbed 31% in constant currency to $63.9 billion. Wall Street has been using cloud results as a gauge of whether AI spending is paying off.
Spending came in light
Capital expenditures were $45.2 billion. That is up from $34.9 billion a year ago, but below the $51 billion analysts expected.
The lighter spend helped the earnings beat. It also hit chip stocks, which dropped in late trading as investors read it as less demand for AI hardware.
CFO Amy Hood said capex should top $50 billion in the second quarter, in line with estimates. She added that spending should speed up in the second half of the fiscal year, mainly on CPUs and GPUs, with higher memory and storage costs in the mix.
Free cash flow was $18.6 billion. That is down from $25.7 billion a year earlier but well above the $7.99 billion Wall Street expected.
Alphabet (GOOGL) reported negative free cash flow on Wednesday night. Microsoft’s number looks sturdy next to that.
CEO Satya Nadella said the company is “delivering greater capability, choice, control, and cost efficiency for customers across our entire stack.”
Guidance and soft spots
Hood said Azure growth should hit 49% in the second quarter. Analysts had been looking for 44.6%.
Ryan Lee of Direxion said the Azure beat shows Microsoft’s AI monetization is moving along well. Steve Sosnick of Interactive Brokers said there is “certainly enough here for investors to be encouraged.”
Not every part of the business shined. The devices and consumer segment fell 3%, pulled down by Xbox, Windows and devices. Higher memory prices have pushed up PC costs and hurt demand.
Microsoft also made headlines earlier this week with voluntary exit offers to 60,000 employees. The company expects only a fraction of them to accept as it works to rein in costs.
Last quarter, Microsoft was the only major AI hyperscaler that did not raise its capex forecast. Meta, Alphabet, Amazon and Oracle are the others in that group.
Microsoft’s stock was down 0.06% at Wednesday’s close. The premarket gain of $17.18 on Thursday came after the earnings call, where management gave its outlook for capex, free cash flow and revenue.
Stop guessing and start investing with confidence. KnockoutStocks gives you the AI insights, market intelligence, and stock research you need to spot opportunities, cut through the noise, and make smarter investment decisions — all in one powerful platform.
Sign up today and get 50% OFF full access to our premium stock picks.
Simply use coupon code SPECIAL50 at checkout to claim your exclusive discount.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
