Microsoft NASDAQ:MSFT added nearly $450 billion in market value Thursday, posting the largest one-day gain on record for a company after its earnings and cloud outlook convinced investors that aggressive artificial-intelligence spending is beginning to produce meaningful returns. The 15%-plus rally lifted Microsoft's valuation to roughly $3.35 trillion and reduced its 2026 decline to about 5%.
The gain surpassed Nvidia's NASDAQ:NVDA previous record of $441 billion, set on April 9, 2025. At least nine brokerages subsequently raised their Microsoft price targets, lifting the average target to $560.90 and signaling that Wall Street increasingly views the company's AI infrastructure buildout as a growth investment rather than an uncontrolled drain on cash.
Microsoft reported fiscal fourth-quarter revenue of $90 billion, up 18%, while adjusted earnings reached $4.74 per share. Azure revenue jumped 43%, beating the roughly 40% consensus estimate, as Microsoft continued expanding data-center capacity to meet demand. Its cloud backlog climbed to $678 billion from $627 billion in the previous quarter, providing stronger visibility into future revenue.
The decisive catalyst was Microsoft's outlook. Management expects Azure growth of about 45% in constant currency during the September quarter, well ahead of the 40.92% analyst estimate. Microsoft also maintained plans for $175 billion of calendar-2026 capital expenditures and said fiscal 2027 spending would rise year over year.
Investor takeaway On Microsoft Stock
Investors should watch whether Microsoft can convert its enormous backlog while keeping Azure growth above 40% and limiting margin pressure from AI infrastructure. Fourth-quarter free cash flow remained strong at $19.6 billion but fell 23% year over year, while quarterly capital expenditures exceeded $41 billion.
Continued Azure acceleration, rising Copilot adoption and faster monetization of new capacity would support the post-earnings revaluation. Slower demand, delayed data-center deployment or deeper free-cash-flow declines would revive the spending concerns that the record rally temporarily pushed aside.