Microsoft Rises About 4% After Hours as Azure Grows 48% and Capital Spending Comes In Light
Microsoft disclosed Azure revenue in dollars for the first time, $33.17 billion, and guided to faster cloud growth in the fiscal second quarter.
Wednesday, October 28, 2026/2 min read
While Alphabet sank, Microsoft rose. Shares gained about 4 percent in after-hours trading on Wednesday after fiscal first-quarter results beat on revenue, profit and the number investors watch most, Azure growth, according to SiliconANGLE.
Revenue rose 19 percent to $92.28 billion against about $90.69 billion expected. Adjusted earnings were $4.89 a share against $4.73, and net income was $36.63 billion, up from $27.75 billion a year ago, per SiliconANGLE. Il Sole 24 Ore notes the adjusted figure excludes a loss of about $200 million on Microsoft's OpenAI investment; on the reported basis, earnings were $4.92 a share against $3.72 a year earlier.
The contrast with Alphabet, which reported in the same window, was sharp, as we set out in our Alphabet report. Alphabet spent $51.4 billion on capital projects and burned cash. Microsoft spent less than forecast and still grew its cloud faster than the market expected, which is the combination investors had hoped to see from the AI spenders this week.
How fast did Azure grow?
Azure grew 48 percent. For the first time Microsoft disclosed the dollar figure, $33.17 billion, above the $32.32 billion analysts had modelled. Microsoft Cloud revenue reached $63.9 billion, up 31 percent in constant currency, Investing.com reported.
Guidance was the kicker. Microsoft expects second-quarter revenue of $96 billion to $97.1 billion, above the $95.6 billion analysts had estimated, and Azure growth of 49 to 50 percent in constant currency against a 45.1 percent forecast, SiliconANGLE said. Finance chief Amy Hood put the constraint plainly: "We still have demand that exceeds supply."
Why did Microsoft's capital spending surprise investors?
It came in light. Capital expenditure including finance leases was $45.2 billion, up about 30 percent, but below the $50.67 billion analysts projected, Il Sole reports. Free cash flow still fell 27 percent to $18.63 billion. Hood said Microsoft expects to stay free-cash-flow positive through fiscal 2027, SiliconANGLE reported, and has debt-market options it has not used.
Investing.com added that Azure passed $100 billion in annual revenue during fiscal 2026. Hood said the new Microsoft 365 E7 bundle has reached millions of seats, SiliconANGLE reported.
What changed in how Microsoft reports?
Microsoft reorganised its segments. Agents and Infra brought in $76.8 billion, up 25 percent, and Devices and Consumer $15.48 billion, down 3 percent. Device and Windows licence sales fell 22 percent, which chief executive Satya Nadella attributed to higher memory and storage costs that have lifted PC prices. Microsoft 365 Copilot users grew 50 percent from the prior quarter, though Nadella did not give a seat count.
Thursday opens with Alphabet's capital-spending bill in the headlines and Microsoft's lighter one in contrast, and both stocks will be tested in regular trading. Whether that gap lasts will decide if investors read this report as a breakthrough or a one-quarter pause.
Published in The Outspoken Digest
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