Image Source: TradingView
By Brian Nelson, CFA
On July 29, Microsoft (MSFT) put up better than expected fourth-quarter fiscal 2026 results, with both revenue and non-GAAP diluted earnings per share exceeding the consensus forecast. Revenue of $90 billion increased 18% (up 17% in constant currency), while operating income of $40.6 billion advanced 18%. Non-GAAP net income was $35.3 billion, increasing 22%, while non-GAAP diluted earnings per share increased 23% in the quarter. Azure and other cloud services revenue increased 43% in the quarter, better than consensus expectations.
Management had the following to say about the results:
We are advancing the frontier on the cost-to-outcome curve, ensuring every customer can turn tokens into business results. This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation.
We delivered a strong quarter to close out the fiscal year, highlighted by Microsoft Cloud revenue of $59.3 billion, up 27% year-over-year.
Microsoft ended the quarter with $76.8 billion in total cash and short-term investments versus $40.3 billion in current and long-term debt. For the three months ended June 30, net cash from operations was $55.4 billion, while capital spending was $35.8 billion, resulting in free cash flow of $19.6 billion. On the earnings call, Microsoft guided revenue for the current quarter to $89.85-$90.95 billion, above the consensus forecast of $89.72 billion. In the period, Azure revenue is expected to grow 45% year-over-year in constant currency and capital spending is anticipated over $50 billion. We liked the momentum behind Azure and Copilot, and Microsoft remains a core holding in the newsletter portfolios.
—–
Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and more. Not a member? Subscribe today. The first 14 days are free.