Microsoft (MSFT) just made a major change that could give investors a much clearer view of where its growth is coming from, particularly as artificial intelligence (AI) reshapes its business. Earlier this month, the company announced plans to overhaul how it reports its business segments ahead of its first-quarter fiscal 2027 earnings results in October.
Microsoft previously reported revenue across three segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Starting with Q1 2027, however, these three segments will be condensed into just two: Agents and Infra, and Devices and Consumer. Agents and Infra will include Microsoft 365, GitHub, productivity and server licensing, industry solutions, frontier and support services, and Azure. Meanwhile, Devices and Consumer will include search, advertising, Xbox, and Windows OEM and devices. But the bigger takeaway for investors is what Microsoft plans to disclose within the segments.
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For the first time, the company will report quarterly revenue for its Azure cloud business, giving investors a much clearer picture of the performance of its cloud operation as it competes directly with Amazon's (AMZN) Amazon Web Services (AWS) and Alphabet's (GOOGL) Google Cloud. In addition to Azure, Microsoft will also provide greater transparency into quarterly revenue across key businesses, including M365 Cloud, Industry Solutions, and Ads. The move comes as AI increasingly cuts across Microsoft's products and services, changing what the company builds, how it operates, and how its various businesses fit together.
For investors, the new reporting structure could make Microsoft's financial picture easier to decipher. Rather than relying on broader segment numbers, Wall Street will have more visibility into the performance of individual businesses, with Azure's revenue disclosure potentially being the most important addition. So, with Microsoft gearing up to give investors a sharper view of its business health and AI-driven growth, here's a closer look at MSFT stock.
About Microsoft Stock
Founded in 1975, Microsoft has grown from a modest software company into a global technology leader. Headquartered in Redmond, Washington, the company has played a major role in shaping modern computing through widely used products such as Windows, Office, Teams, and Xbox, which have become an integral part of how people work, connect, and entertain themselves. Over the years, Microsoft has expanded its focus by investing heavily in cloud computing through Azure, helping businesses operate more digitally and efficiently.
Now, the company is accelerating its push into AI, embedding AI-powered tools across its platforms to boost productivity and reshape how users interact with technology. That said, while Microsoft’s leadership and rapid innovation in cloud and AI remain undeniable, MSFT stock hasn’t been getting the same love from investors lately. Shares have been largely weighed down by surging capital expenditures related to AI infrastructure.
Despite being one of the most valuable companies in the world with a massive market capitalization of roughly $3.7 trillion, MSFT stock is up only marginally year-to-date (YTD) and down by less than 1% for the past 52 weeks. That performance trails the broader S&P 500 Index ($SPX), which has climbed about 18% over the past year and 12% so far in 2026.
However, the picture looks considerably brighter in the near term. Microsoft’s latest earnings report showed solid growth in Azure, helping reignite investor enthusiasm and push the stock 20% higher over the past three months, easily beating the broader market’s 4% gain over the same period.
www.barchart.com Inside Microsoft’s Q4 Earnings Report
Microsoft delivered a strong Q4 performance on July 29, comfortably clearing Wall Street expectations as sustained momentum in commercial cloud infrastructure and expanding AI workloads powered growth. Revenue reached $90 billion, up 18% year-over-year (YOY) and ahead of Wall Street’s forecast of $87.4 billion. Adjusted EPS came in at $4.74, up 23% YOY and well above the $4.21 consensus estimate. Operating income also climbed 18% to $40.6 billion.
The cloud story remained the biggest catalyst. Microsoft Cloud revenue surged 27% YOY to $59.3 billion, while commercial remaining performance obligations (RPO) jumped 84% to $678 billion, highlighting the strength of future contracted revenue. The standout performer was the Intelligent Cloud segment, where quarterly revenue climbed 32% to $39.3 billion. Azure and related cloud services accelerated with 43% YOY growth, fueled by broad enterprise adoption of computing capacity and custom AI deployments.
Microsoft’s Productivity and Business Processes segment also continued to expand, with revenue rising 14% YOY to $37.8 billion. Within the segment, Microsoft 365 Consumer cloud revenue increased 24%, LinkedIn revenue rose 12%, and Dynamics 365 revenue climbed 13%.
In contrast, the More Personal Computing division remained the company’s primary operational drag, with revenue declining 4% YOY to $12.9 billion. Persistent weakness in hardware demand weighed on Windows OEM and Devices revenue, which fell 7%, while Xbox content and services declined 10%.
Microsoft’s AI ambitions were also reflected in the scale of its ecosystem. During full-year 2026, management highlighted that Azure revenue surpassed $100 billion for the first time, while Microsoft 365 Copilot surpassed 30 million paid seats, underscoring growing customer adoption of Microsoft’s AI offerings and its role in helping businesses pursue AI transformation.
At the same time, Microsoft continued returning capital to investors, distributing $10.2 billion through dividends and share repurchases during Q4. However, capital expenditures emerged as the key concern for investors. Total quarterly capex and finance lease additions surged to $41 billion, as Microsoft continued investing heavily in data-center construction and GPU clusters to support its growing AI infrastructure needs.
Looking ahead to Q1 2027, Microsoft expects revenue to land between $89.85 billion and $90.95 billion, representing growth of 16% to 17%. The company also expects capex spending to exceed $50 billion for the upcoming quarter.
How Do Analysts View Microsoft Stock?
Wall Street remains firmly bullish on Microsoft, with MSFT stock carrying a consensus “Strong Buy” rating. Of the 51 analysts covering MSFT stock, 41 recommend a “Strong Buy,” six have a “Moderate Buy" rating, and just four have a “Hold” rating, leaving little doubt about the Street’s confidence in the tech giant.
The bull case also comes with meaningful upside potential. The average price target of $559.76 points to roughly 13% potential upside from current levels, while the Street-high target of $700 suggests Microsoft could rally as much as 42% from current levels.
www.barchart.com On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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