GoKawiilMicrosoft shares rose in extended trading on Wednesday after the software maker disclosed strong fiscal fourth-quarter revenue. The stock edged up 3% in extended trading.
Here's how the company did relative to LSEG consensus:
Earnings per share: $4.74 adjusted. That may not compare with the $4.24 adj. per share expected by LSEG
$4.74 adjusted. That may not compare with the $4.24 adj. per share expected by LSEG Revenue: $90.01 billion vs. $87.62 billion expected
Microsoft's revenue grew about 18% year over year in the quarter, which ended on June 30, according to a statement.
Net income of $35.77 billion, or $4.81 per share, increased from $27.23 billion, or $3.65 per share, in the same quarter a year ago. Microsoft cited a $3.2 billion gain from its investment in artificial intelligence lab Anthropic and lower-than-expected costs tied to its first-ever voluntary retirement program. Meanwhile, its Xbox gaming business received an impairment charge.
As of Wednesday's close, the software maker's shares have given up 19% so far in 2026, while the S&P 500 index has gained about 7%. Investors have squeezed longstanding software stocks this year, acting on fears of disruption from generative artificial intelligence models.
Meanwhile, Microsoft is confronting "some concentration risk" with its OpenAI relationship, especially with the ascent of open-source models, Deutsche Bank analysts, who recommend buying Microsoft stock, said in a note last week. Microsoft said in January that around 45% of its $625 billion in commercial remaining performance obligations were tied to OpenAI.
When it comes to allocating computing capacity, CEO Satya Nadella has been trying to balance the needs of the Azure cloud, research and applications such as the Microsoft 365 Copilot assistant. If researchers get ahold of more AI chips for model training, that means fewer will be available for cloud clients.
The company said commercial remaining performance obligations, a measure of unearned revenue and unrecognized revenue, increased 8% to $678 billion from the previous quarter. Sequential growth was driven by commitments from clients other than AI model developers, Microsoft said.
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