On Thursday, Microsoft (MSFT.US) opened sharply higher and was trading more than 12% higher at the time of writing. The surge comes after the company reported its fiscal fourth-quarter results for the 2026 fiscal year, with revenue up 18% year-over-year to $90.01 billion, exceeding analyst expectations by 2.6%.
Full-year total revenue surpassed $331 billion, marking an 18% increase from the previous year. Microsoft Cloud revenue alone exceeded $214 billion, growing 27%. Beyond the fact that both revenue and profit beat expectations and Azure posted its fastest growth in four years, the key driver was the company's proactive decision to lower its fiscal 2027 capital expenditure forecast from $190 billion to $175 billion, which immediately eased market fears about excessive AI spending.
During the earnings conference call, Microsoft executives indicated that capital expenditure for the full 2026 calendar year is still expected to be the previously forecasted $190 billion. However, due to changes in accounting methods that adjusted the estimated useful lives of data centers and office buildings, the expected spending for this year has been reduced to approximately $175 billion, which is nearly 8% lower than the original $190 billion figure.
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