Microsoft (NASDAQ:MSFT) Shares Gap Up Following Better-Than-Expected Earnings

Microsoft Corporation (NASDAQ:MSFT) gapped up before the market opened on Thursday after the company announced better than expected quarterly earnings. The stock had previously closed at $390.54, but opened at $437.90. Microsoft shares last traded at $447.0820, with a volume of 31,112,110 shares changing hands.

The software giant reported $4.74 EPS for the quarter, topping analysts’ consensus estimates of $4.24 by $0.50. The company had revenue of $90.01 billion for the quarter, compared to the consensus estimate of $87.62 billion. Microsoft had a net margin of 39.34% and a return on equity of 31.94%. Microsoft’s revenue was up 17.7% on a year-over-year basis. During the same period in the previous year, the firm earned $3.65 EPS.

Microsoft Dividend Announcement

The company also recently announced a quarterly dividend, which will be paid on Thursday, September 10th. Investors of record on Thursday, August 20th will be issued a dividend of $0.91 per share. The ex-dividend date of this dividend is Thursday, August 20th. This represents a $3.64 annualized dividend and a yield of 0.8%. Microsoft’s payout ratio is presently 21.67%.

Microsoft News Summary

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Azure growth exceeded expectations. Azure revenue rose 43% year over year, ahead of analysts’ roughly 40% forecast, and surpassed $100 billion in annual revenue. Intelligent Cloud revenue increased 32% to $39.3 billion, easing concerns that Microsoft’s AI infrastructure spending is outpacing customer demand. Microsoft tops quarterly cloud growth estimates
• Positive Sentiment: Microsoft beat on revenue and earnings. Fiscal fourth-quarter revenue reached $90.01 billion, up 17.7% year over year and above the $87.62 billion consensus estimate. Adjusted EPS of $4.74 exceeded expectations of $4.24, while net income increased approximately 31%. First-quarter fiscal 2027 revenue guidance of $89.9 billion to $91.0 billion was also above consensus. Microsoft fiscal fourth-quarter earnings
• Positive Sentiment: AI monetization showed further traction. Microsoft said Copilot surpassed 30 million paid seats, while management emphasized a future model combining subscriptions with usage-based consumption. The company also reported that AI demand continues to outpace capacity, supporting its long-term Azure outlook. Microsoft and Meta AI earnings reaction
• Positive Sentiment: Capital-spending concerns moderated. Microsoft held its AI capital-expenditure outlook steady and said GPU spending can be slowed if demand weakens. Extending data-center useful lives may also reduce depreciation pressure. The results prompted multiple analyst price-target increases, including BMO’s move to $515 and Goldman Sachs’ reported target of $640. Microsoft holds AI capital spending forecast
• Neutral Sentiment: Broader market conditions remain unsettled. The Federal Reserve held interest rates unchanged, but elevated inflation and a hawkish policy tone could continue to pressure high-growth technology valuations. Microsoft’s results helped lift technology and semiconductor shares. Market factors affecting stocks
• Negative Sentiment: Cloud-security and regulatory risks remain. Alphabet-owned Wiz disclosed a vulnerability that could have exposed Microsoft cloud customers, while U.K. regulators are investigating whether Microsoft misled customers about Microsoft 365 subscription options. These issues could create reputational, compliance, or remediation costs. Wiz cloud vulnerability report

Wall Street Analysts Forecast Growth

A number of equities analysts have issued reports on MSFT shares. Weiss Ratings reaffirmed a “hold (c)” rating on shares of Microsoft in a research note on Monday, July 6th. HSBC cut their price objective on Microsoft from $593.00 to $571.00 in a report on Thursday, April 30th. DA Davidson reaffirmed a “buy” rating and set a $550.00 target price on shares of Microsoft in a research note on Monday, July 6th. Sanford C. Bernstein set a $647.00 target price on Microsoft in a report on Thursday. Finally, Raymond James Financial cut shares of Microsoft from a “market perform” rating to a “market perform” rating in a research report on Tuesday, May 5th. Forty-two analysts have rated the stock with a Buy rating and six have issued a Hold rating to the company. According to data from MarketBeat.com, Microsoft currently has a consensus rating of “Moderate Buy” and an average price target of $556.20.

Insider Activity

In related news, EVP Amy Coleman sold 1,262 shares of Microsoft stock in a transaction on Thursday, May 14th. The stock was sold at an average price of $411.34, for a total value of $519,111.08. Following the transaction, the executive vice president directly owned 46,003 shares in the company, valued at $18,922,874.02. The trade was a 2.67% decrease in their position. The sale was disclosed in a legal filing with the SEC, which is available through this link. Also, EVP Takeshi Numoto sold 4,500 shares of the business’s stock in a transaction on Wednesday, June 10th. The stock was sold at an average price of $402.84, for a total value of $1,812,780.00. Following the sale, the executive vice president directly owned 47,468 shares in the company, valued at $19,122,009.12. This trade represents a 8.66% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. In the last 90 days, insiders sold 23,762 shares of company stock worth $10,508,361. Insiders own 0.03% of the company’s stock.

Institutional Inflows and Outflows

Several institutional investors have recently made changes to their positions in the company. Platform Technology Partners lifted its stake in Microsoft by 7.4% in the 2nd quarter. Platform Technology Partners now owns 45,761 shares of the software giant’s stock worth $17,070,000 after acquiring an additional 3,167 shares in the last quarter. Financial Perspectives Inc grew its stake in Microsoft by 5.2% during the 2nd quarter. Financial Perspectives Inc now owns 35,154 shares of the software giant’s stock valued at $13,113,000 after acquiring an additional 1,725 shares in the last quarter. MBE Wealth Management LLC grew its stake in Microsoft by 6.5% during the 2nd quarter. MBE Wealth Management LLC now owns 3,600 shares of the software giant’s stock valued at $1,343,000 after acquiring an additional 220 shares in the last quarter. SWP Financial LLC increased its holdings in shares of Microsoft by 33.4% in the 2nd quarter. SWP Financial LLC now owns 1,030 shares of the software giant’s stock valued at $384,000 after purchasing an additional 258 shares during the period. Finally, Wealth Advisory Solutions LLC increased its holdings in shares of Microsoft by 20.5% in the 2nd quarter. Wealth Advisory Solutions LLC now owns 23,516 shares of the software giant’s stock valued at $8,772,000 after purchasing an additional 3,994 shares during the period. 71.13% of the stock is owned by hedge funds and other institutional investors.

Microsoft Stock Up 14.2%

The business’s 50-day moving average price is $396.43 and its 200-day moving average price is $405.74. The company has a quick ratio of 1.27, a current ratio of 1.28 and a debt-to-equity ratio of 0.08. The firm has a market capitalization of $3.31 trillion, a PE ratio of 26.61, a price-to-earnings-growth ratio of 1.20 and a beta of 1.13.

Microsoft Company Profile

Microsoft Corporation is a global technology company headquartered in Redmond, Washington. Founded in 1975 by Bill Gates and Paul Allen, Microsoft develops, licenses and supports a broad range of software products, services and devices for consumers, enterprises and governments worldwide. Its operations span personal computing, productivity software, cloud infrastructure, enterprise applications, developer tools and gaming.

Microsoft’s product portfolio includes the Windows operating system and the Microsoft 365 suite of productivity and collaboration tools (Office apps, Outlook, Teams).