Microsoft, opens new tab on Wednesday said it expects to keep generating cash through its just-started fiscal 2027 and gave a capital expenditure forecast below Wall Street estimates after an accounting change for data center leases.
The company also forecast sales and cloud growth that beat expectations for its current fiscal first quarter, after it also topped Wall Street estimates for quarterly cloud revenue growth in its fiscal fourth quarter ended June 30. All told, the metrics were a sign Microsoft’s massive AI spending bets were paying off, easing investor concerns that one of tech’s biggest cash generators was spending heavily in pursuit of profits that had yet to materialize. They also appeared to give investors confidence that Microsoft, which is facing a strong challenge from long-time rival Google in its cloud business, can hang on to its No. 2 position behind cloud leader Amazon.com.
Shares of Redmond, Washington-based Microsoft were up more than 8% in extended trading after its forecast.
Revenue at the company’s Azure cloud-computing business rose 43% in its fiscal fourth quarter, compared with analysts’ consensus estimate of 39.98%, according to Visible Alpha.
