Microsoft set for record one-day market cap gain after upbeat Azure forecast
MSFT•Stock lags peers but target prices rise
The company has lagged some of its "Magnificent Seven" peers this year; its stock was down more than 18%, up to Wednesday's close.
At least nine brokerages raised the target price on the stock, with the mean target now $560.90.
Microsoft shares soar on strong cloud and AI outlook
July 30 (Reuters) - Microsoft's MSFT.O shares soared more than 16% on Thursday, putting the company on track for a record one-day gain in market value after it said it expects to keep generating cash through its new fiscal year and forecast cloud growth above Wall Street expectations.
If gains hold, the software giant would add more than $485 billion to its market value, surpassing chip giant Nvidia's NVDA.O previous record of $441 billion on April 9, 2025, according to LSEG data.
"Microsoft reported a very strong quarter and it struck the tone markets are looking to hear as the key drivers of growth came from the cloud and AI divisions," said Brian Mulberry, chief market strategist at Zacks Investment Management.
Capital spending plans unchanged as Azure growth tops estimates
The results offered fresh evidence that Microsoft's massive AI investments are beginning to pay off, helping ease investor concerns that heavy spending on data centers and computing infrastructure could outpace demand.
The company said its spending plans remain unchanged and that it expects capital expenditures of $50 billion for the fiscal first quarter of 2027 and $175 billion for the 2026 calendar year.
In its first quarter, Microsoft expects a 45% growth on a constant currency basis for its Azure cloud computing unit, well above analyst estimates of 40.92%, according to data from Visible Alpha.
"The key question was whether it could shift the conversation from how much it is spending on AI to what it is earning from those investments, and the results suggested meaningful progress," Direxion's head of capital markets, Jake Behan, said.
