Microsoft Surges 24.6% on Strong Quarterly Results and Optimistic Guidance

Microsoft's stock surged 24.6% in July, significantly outperforming the market. The S&P 500 index remained essentially flat, while the tech-heavy Nasdaq Composite index declined 3.2%. This jump was particularly notable given that Microsoft shares had been down nearly 19% year-to-date before the company's earnings release.

The stock price increase followed the release of Microsoft's quarterly results for fiscal 2026, which ended June 30. The company reported revenue of $90 billion, a 18% year-over-year increase that exceeded Wall Street's consensus estimate of $87.6 billion. Net income on a non-GAAP basis was $35.3 billion, up 22%, and adjusted earnings per share (EPS) rose 23% to $4.74.

The strong performance was driven by Microsoft Cloud, with revenue increasing 27% year-over-year to $59.3 billion. Commercial remaining performance obligation grew 84% to $678 billion, driven by demand for artificial intelligence capabilities. Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats.

CFO Amy Hood provided optimistic guidance for the next quarter, expecting revenue growth of 16% to 17%. For the full year fiscal 2027, Microsoft expects another year of double-digit revenue and operating income, with continued free cash flow positivity.