Investors cheer as software giant pours billions into data centers, chips, and AI hires—and still beats earnings for fifth straight quarter
Microsoft’s 50th birthday came with a $100 billion present—for itself. And Wall Street couldn’t be happier.
On Wednesday, the company posted fiscal Q4 earnings that blew past analyst forecasts, powered by relentless growth in cloud services and an even more aggressive push into artificial intelligence. Despite funneling unprecedented sums into AI infrastructure, Microsoft is still raking in profits. That double act—spend big, earn bigger—has made the company the current darling of investors.
Shares surged more than 7% in after-hours trading, hitting $513. That’s just shy of a record and up 22% since January.
AI Spending Soars, and So Do Profits
You’d think dropping $100 billion in capital expenditures might spook shareholders. Nope. Not even a little.
Microsoft expects to outlay $100 billion on capex in fiscal 2026, a 14% jump from last year. Most of that will go toward the infrastructure needed to dominate AI—think data centers, custom silicon, and, of course, an army of engineers.
But here’s the twist: Microsoft is spending like there’s no tomorrow and making more money than ever.
Net income hit $28.5 billion this quarter, up 21% year-on-year. Azure revenue alone jumped 26%. CEO Satya Nadella didn’t brag—but he didn’t have to.
“Every customer I speak with is looking to adopt next-generation AI,” Nadella said on the earnings call. “And we are building the infrastructure to meet that demand at global scale.”
One sentence. One flex.
The Market Sees Green—Everywhere
This wasn’t just an earnings beat. It was a mic drop.
For five straight quarters, Microsoft has now outperformed Wall Street’s expectations. That kind of consistency is rare, even for a Big Tech blue chip. But what really has investors buzzing is how it’s managing to keep up the momentum even as it shovels cash into capital projects.
A quick glance at market reactions says it all:
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Share price post-earnings: +7.2%
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YTD stock growth: +22%
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Market cap: $3.75 trillion (second only to Apple)
That makes Microsoft not just a tech leader, but one of the most valuable and consistent performers in the entire S&P 500.
Big Tech’s Billion-Dollar Arms Race
Microsoft’s AI spending sounds huge—because it is—but it’s not operating in a vacuum. Its fiercest rivals are also emptying their wallets.
Last week, Alphabet said it now plans to spend $85 billion in 2025—up $10 billion from previous estimates. Amazon, not to be outdone, is targeting $100 billion as well. That puts three of the world’s largest tech giants on the same financial trajectory: spend now, dominate later.
A tech analyst at Bernstein described the mood as “controlled mania.” Everyone is sprinting, but no one knows exactly where the finish line is.
Still, Microsoft seems to be setting the pace. Its AI ecosystem is maturing faster than expected thanks to strong enterprise adoption, growing Copilot usage, and key partnerships with OpenAI and Nvidia.
One trader summed it up like this: “You’re not investing in AI unless you’re investing in Microsoft.”
How the Money’s Being Spent
Where exactly is that $100 billion going? Microsoft has been unusually transparent about the breakdown.
Here’s what insiders are pointing to:
• Data Centers: New sites under construction across North America, Europe, India, and the Gulf region
• Custom AI Chips: Boosting production of in-house silicon to reduce Nvidia dependence
• AI Talent: Hiring thousands of researchers and developers in cloud AI
• Cloud Expansion: Upgrades to Azure’s backbone, including faster interconnect and global reach
• OpenAI Integration: Building out infrastructure to support ChatGPT-powered features across Office, Windows, and Teams
That’s a full-court press—no single bet, just a portfolio of moonshots.
Celebrating 50 Years—With a Very Different Look
It’s been five decades since Microsoft was born in a small Albuquerque garage. Back then, Bill Gates and Paul Allen were focused on building BASIC interpreters for microcomputers.
Now it’s a $3.75 trillion behemoth.
On the company’s 50th anniversary this April, the vibe was less nostalgic and more forward-looking. Satya Nadella, who took over from Steve Ballmer in 2014, has completely reshaped the company—from a sluggish Windows house into an AI-first juggernaut.
The shift didn’t happen overnight. But it’s been stunning to watch.
And Microsoft isn’t just pushing AI—it’s embedding it everywhere. Copilot features are now live in Word, Excel, PowerPoint, and Outlook. Teams is getting smarter. Azure is more automated. Even GitHub is using AI to write code for coders.
What Could Slow Them Down?
For all the euphoria, not everything’s sunshine and soaring stock charts.
There are some legitimate risks:
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Regulatory Scrutiny: Microsoft’s tie-up with OpenAI is being closely watched in both the U.S. and EU.
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Chip Supply Chain: The company still relies on Nvidia for GPUs. A slowdown there could bottleneck progress.
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Enterprise Spending Fatigue: If economic headwinds return, big customers might slow AI adoption.
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Talent Wars: Hiring fast means paying top dollar—sometimes for people who don’t deliver.
Still, even bearish analysts admit: Microsoft’s execution has been near flawless this past year.
What’s Next? Probably More Spending
When asked on the call whether this year’s $100 billion number might get even bigger, CFO Amy Hood didn’t blink.
“We believe the investments are foundational and necessary,” she said, “and we remain committed to scaling with demand.”
Translation: don’t expect them to pump the brakes anytime soon.
Wall Street heard that loud and clear—and doubled down.
