Key Highlights

● Microsoft Cloud revenue reached $63.9 billion.

● Azure growth accelerated and beat expectations.

● Capital spending came in below consensus.

● Microsoft is a component of the Dow Jones Industrial Average.

Microsoft beat forecasts on revenue and earnings as its Azure cloud business accelerated, lifting the stock in extended trading on Wednesday, October 28.

Microsoft (NASDAQ:MSFT) delivered the upbeat cloud numbers investors were hoping for. After the close, the software giant reported fiscal first-quarter results that topped Wall Street estimates, including Microsoft Cloud revenue of $63.9 billion, and its shares climbed in extended trading. During the regular session, the stock had finished essentially flat at $531.01 as investors waited for the report.

Cloud Powers the Beat

Microsoft reported revenue of $92.28 billion, ahead of analyst estimates of about $90.63 billion. Microsoft Cloud revenue of $63.9 billion came in above the roughly $61.62 billion analysts had expected.

Azure, the company's cloud computing platform and the main way it sells AI computing power to businesses, was the standout. Growth accelerated and beat expectations, a closely watched measure of demand for the company's cloud and AI services. Earnings per share also topped forecasts, though reports differed on the exact figure: one source put adjusted EPS at $4.89 against an estimate of $4.73, while another reported $4.92 against $4.72 expected.

Contrast With Alphabet

Capital spending came in below consensus, according to reports, a detail that may have reassured investors who have worried about the cost of building AI data centers. Microsoft's report arrived alongside Alphabet's (NASDAQ:GOOGL), and the two stocks moved in opposite directions.

Alphabet slid sharply after missing earnings estimates, reporting negative free cash flow and raising its 2026 capital spending forecast. That pulled Nasdaq-100 futures lower overnight, while Dow futures edged higher. Separately, Microsoft reportedly offered voluntary buyouts to up to 60,000 employees.

The Dow's Reaction

Microsoft is one of the 30 members of the Dow Jones Industrial Average, which rose 97.53 points to close at 52,475.10 on Wednesday during the regular session. The S&P 500 added 21.38 points to 7,743.98 for its third straight gain, and the Nasdaq Composite climbed 72.04 points to 26,549.85.

The Federal Reserve left its benchmark rate range unchanged in a 10-2 vote. Fed Chair Kevin Warsh, discussing capital spending, said it was not just strong but broadening, a remark that fit neatly with Microsoft's cloud results. Long-dated Treasury yields climbed, and chip stocks rallied, with the Philadelphia Semiconductor Index posting a fourth straight gain.

What to Watch

The question for Thursday is whether Microsoft's after-hours gain holds at the open, and whether it can offset Alphabet's drag on the broader technology sector.

The advance estimate of third-quarter GDP and September PCE inflation data arrive at 8:30 a.m. ET. Caterpillar (NYSE:CAT), another Dow component, reports before the open along with Mastercard (NYSE:MA) and Merck (NYSE:MRK), and Amazon (NASDAQ:AMZN), Microsoft's chief cloud rival, reports after the close. Apple (NASDAQ:AAPL) and Meta (NASDAQ:META) follow later this week.