Key Highlights

● Microsoft reportedly offered buyouts to up to 60,000 employees.

● Shares were roughly flat during the regular session.

● After the bell, Microsoft beat on revenue and earnings.

● Azure growth accelerated and topped expectations.

Microsoft drew heavy attention on Wednesday, October 28, after a report that it offered voluntary buyouts to tens of thousands of employees, then rose after the bell on a quarterly earnings beat.

Microsoft (NASDAQ:MSFT) was one of the most talked-about stocks on the Nasdaq-100 on Wednesday, and not only because of its earnings. Before the opening bell, a market report said the software giant had offered voluntary buyouts to up to 60,000 employees. Then, after the close, Microsoft delivered quarterly results that beat Wall Street's expectations and sent the stock higher in extended trading.

The Buyout Report

The reported buyout offer drew attention because of its potential scale. Voluntary buyouts typically give employees the option to leave in exchange for a severance package, allowing a company to reduce headcount without involuntary layoffs. Further details on the terms and eligibility were not immediately available.

The report arrived as large technology companies pour record sums into artificial intelligence infrastructure, from data centers and custom chips to the power and cooling needed to run them. Microsoft has been one of the biggest spenders in that race, which put its quarterly capital spending figures under an especially bright spotlight on Wednesday evening. Despite the buzz, Microsoft shares were essentially flat during the regular session, closing at $531.01.

The Earnings Beat

The bigger move came after the bell. Microsoft reported fiscal first-quarter earnings per share of $4.89 on an adjusted basis, according to one report, while another put the figure at $4.92. Either way, it topped consensus estimates of $4.72 to $4.73. Revenue of $92.28 billion beat the roughly $90.6 billion expected.

Microsoft Cloud revenue reached $63.9 billion, ahead of the $61.62 billion forecast, and growth at its Azure cloud platform accelerated and topped expectations. Capital spending came in below consensus, a detail investors appeared to welcome as concerns about AI spending ran high.

A Contrast With Alphabet

Microsoft's results stood in sharp contrast to those of Alphabet (NASDAQ:GOOGL), which slid sharply after the bell after missing estimates on both revenue and earnings and reporting negative free cash flow. Alphabet's miss weighed on Nasdaq-100 futures overnight, offsetting some of the lift from Microsoft.

The AI-infrastructure trade was strong during the regular session, with Vertiv (NYSE:VRT) soaring after raising guidance and Oracle (NYSE:ORCL) jumping after its investor day. The Philadelphia Semiconductor Index rose for a fourth straight session to 11,684.00.

What to Watch

The Federal Reserve left its benchmark rate range unchanged in a 10-2 vote, and long-dated Treasury yields climbed. The S&P 500 rose 21.38 points to 7,743.98, and the Dow Jones Industrial Average, of which Microsoft is a member, gained 97.53 points to 52,475.10.

Investors will watch Thursday's open to see whether Microsoft's after-hours gain holds against the drag from Alphabet. Amazon (NASDAQ:AMZN), Microsoft's main cloud rival, reports after the close, and Apple (NASDAQ:AAPL) and Meta (NASDAQ:META) report later this week.