The quarter

Microsoft closed fiscal 2026 with fourth-quarter revenue of $90.0 billion, up 18% and $2.40 billion ahead of consensus. Non-GAAP earnings of $4.74 per share beat the $4.24 estimate by 11.8%, an unusually wide margin for a company this predictable. Azure grew 43% and passed $100 billion of annual revenue for the first time. For the full year, revenue reached $331.8 billion and operating income $155.2 billion, up 21%.

The number that matters

Commercial remaining performance obligation, the contracted revenue not yet recognised, reached $678 billion, up 84% year over year. That figure says considerably more about the next three years than any single quarter’s beat. Management then guided Azure to roughly 45% constant-currency growth in the current quarter, an acceleration past $100 billion of annual revenue rather than the deceleration consensus had assumed. Chief financial officer Amy Hood said demand continues to exceed available supply, so efficiency gains are monetised almost immediately.

The accounting note

Disclosed alongside the results: from fiscal 2027 Microsoft will extend the estimated useful life of data centres and office buildings from 15 years to 25 years. That reduces the annual depreciation charge on affected assets by roughly two-fifths. The company has not quantified the effect and no estimate is offered here, but the direction is clear enough. Part of the guided fiscal 2027 operating income growth will arise from an accounting revision rather than from operations, and fiscal 2027 margins will not be directly comparable with fiscal 2026.

The price

The shares rose from $390.54 on July 29 to $492.81 on August 4, a gain of 26.2% across four sessions with no give-back at any point. That leaves the stock 21% above its twenty-day moving average with a relative strength index of 79. At 27.5 times fiscal 2026 earnings the multiple is not demanding for this growth profile, but only about 12% of upside remains to a probability-weighted fair value of $553.

The call

The rating stays Buy. Microsoft is spending at record scale while still returning $10.2 billion a quarter to shareholders, which separates it sharply from peers funding similar ambitions by suspending buybacks. But risk and reward at today’s price sit close to one to one. Entering between $440 and $475 shifts that ratio to nearly three to one. The business deserves to be owned; it does not need to be bought this morning. The complete Microsoft (MSFT) report, including the trade plan, is on our Reports page.