Microsoft's Cloud Computing Dominance Trumps S&P 500 Growth
Microsoft's steady growth in cloud computing is propelling its stock forward. The tech giant has been steadily gaining market share as artificial intelligence (AI) demand surges, and its cloud computing unit saw revenues rise by 27% year over year in the fiscal 2026 fourth quarter.
This segment has maintained high growth rates for many quarters, and it's expected to continue. AI has boosted enterprise demand for cloud platforms, with competitors like Amazon and Alphabet also reporting strong demand for their own cloud services.
The recurring revenue model of cloud computing is a major advantage for Microsoft. Established customers will have to upgrade their plans as their needs evolve, making it cumbersome to switch from one cloud platform to another.
While other business segments are doing well too, such as LinkedIn and online advertising revenue up by 12% and 10% year over year respectively, the cloud computing segment accounts for roughly two-thirds of Microsoft's revenue.