Microsoft Corporation (MSFT.US) fully opens its AI monetization engine! Perfect performance in Q4 skyrockets stock price, shocking Wall Street as growth curve is underestimated.

On Thursday, Microsoft Corporation (MSFT.US) announced better-than-expected fourth-quarter financial results and performance guidance, receiving not only market recognition but also unanimous praise from Wall Street analysts. After the financial report was released, the stock price of this tech giant soared by about 7% at one point in Thursday's trading session and ultimately closed up nearly 4%. As of Thursday's closing, the company's stock price has risen over 27% year-to-date. Wedbush raised its target price for Microsoft Corporation from $600 to $625 and maintained an "outperform" rating to reflect its "impressive growth momentum in cloud services and artificial intelligence (AI) business". Analysts led by Daniel Ives stated, "This quarter's performance has been uplifting for Microsoft Corporation, with a significant rebound in Azure cloud service growth and continued strong momentum in the AI revolution. More and more businesses are investing in this strategic area, with all metrics exceeding market expectations." Analysts project that by the 2026 fiscal year, the AI business could bring in approximately $25 billion in incremental revenue for the company. Historical data shows that for every $100 businesses have invested in Microsoft Corporation's Azure cloud services in recent years, an additional $50 will be allocated for AI services in the coming years. "This quarter has been a near-perfect performance for Microsoft Corporation," Ives and his team said. "Cloud services and AI technology are driving profound transformations across industries, with the company retaining a pivotal position in the AI revolution. However, we believe that Microsoft Corporation's AI monetization process is just beginning, with the growth potential for the 2026 fiscal year still being underestimated by the market." Analysts specifically highlighted that Azure revenue grew by 39% year-on-year (surpassing market expectations of 34% and the benchmark of 36%), with total revenue exceeding $75 billion (a 34% year-on-year increase), serving as a key indicator of AI contribution. All workloads experienced comprehensive growth, validating that AI technology is reshaping the development trajectory of Microsoft Corporation's cloud business. Looking ahead, despite facing computational constraints in the first half of the 2026 fiscal year, Microsoft Corporation has provided a solid guidance for the annual start. Analysts emphasize that it is evident that the 2026 fiscal year will be a true turning point for the growth of Microsoft Corporation's AI business. Analysts project that revenue for the "Intelligent Cloud" department in the 2026 fiscal year is expected to reach $30.1 billion to $30.4 billion (Wall Street's expectation is $29.42 billion); calculated at a fixed exchange rate, the projected Azure growth rate is close to 37% (Wall Street's expectation is 34%). The team led by Ives revealed that Microsoft Corporation is aggressively pushing forward its strategy of integrating cloud services and AI development. The company plans to invest over $30 billion in capital expenditure in the first quarter of the 2026 fiscal year, with annual capital expenditure estimated to reach $120 billion. This strategic layout aims to expand cloud infrastructure while increasing data center capacity to seize sustained strong market demand. Goldman Sachs Group, Inc. reiterated its "buy" rating for Microsoft Corporation, with a target price raised from $550 to $630. The team of analysts led by Kash Rangan stated, "We are increasingly convinced that AI-driven growth will continue to help Microsoft Corporation expand market share across various business areas. This quarter's performance affirms our view - AI technology is penetrating the entire product stack, with ripples generated by the company's leadership in GPU computing driving demand for its high-margin product suite. It is worth noting that these products cover all levels of the technology stack." Analysts believe that in the era dominated by intelligent systems, as AI workloads rapidly expand, Microsoft Corporation will benefit comprehensively from the growth in storage, database, and application usage (including revenue sharing with OpenAI). The Rangan team emphasized, "Referring to the development trajectory of previous cloud computing cycles, as the scale of high-margin AI inference workloads expands and Microsoft Corporation continues to guide customers toward using its high-margin platforms and applications through cross-selling methods, the company's gross margin and profit growth will regain an accelerated trend." KeyBanc Capital raised its rating for Microsoft Corporation from "hold" to "buy" and set a target price of $630. The team led by analyst Jackson Ader admitted that their downgrade in April was due to concerns about capital expenditures and depreciation costs eroding gross margins, as well as market disputes over the return on investment in AI, along with doubts about Microsoft Corporation's willingness and ability to cut costs and maintain profitability. Additionally, macroeconomic concerns highlighted in the bank's spring research are believed to have a more significant impact on Microsoft Corporation compared to its peers. However, data shows that the growth rate of Azure business on a constant currency basis has increased by 8 percentage points in the second half of the year: from 31% in January to 35% in March, further accelerating to 39% at the end of the fiscal year. The strong performance in the past two quarters has temporarily quieted the aforementioned controversies. The Ader team added that Azure revenue has exceeded guidance by about $500 million and $700 million in the last two quarters, equivalent to the market value of a company like Monday.com (MNDY.US) being pulled out from between the cushions of a sofa. "Such better-than-expected performance leads us to believe that there will be fewer debates in the market on the support costs for Azure business throughout the year," they stated. The Ader team also pointed out that the financial results call did not mention significant macro headwinds, and "since we expressed concerns about the need for operational spending cuts to maintain profitability, Microsoft Corporation has laid off more than ten thousand employees." "We previously stated in the last quarter that, under the 'hold' rating, we might not be able to withstand several quarters of significantly better-than-expected performance, and now, we cannot withstand it and no longer adhere to the logic behind this rating," they added.