It had been a difficult year for shareholders of Microsoft (NASDAQ: MSFT), who saw the stock grind lower throughout 2026. Then, fourth-quarter earnings (fiscal year 2026) happened, and shares shot up 18% in a week, a remarkable move for a stock worth over $3 trillion. And just like that, Microsoft's stock is positive for the year.
Months of anguish have fallen to the wayside. Perhaps the best news yet, it's not too late to buy the stock. Here's what you need to know.
This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia.
Continue » The first question is naturally: why did Microsoft surge on Q4 earnings? Investors went into earnings laser-focused on Microsoft's AI progress and apparently came away impressed. Revenue grew by 18% year over year to $90 billion for the quarter, and net income soared 31% versus the prior year.
Azure is the primary engine driving this, with 43% growth and topping $100 billion in annual revenue for the first time. Importantly, Microsoft's AI strategy is progressing. CEO Satya Nadella noted that Microsoft 365 Copilot has surpassed 30 million paid seats, an encouraging sign that the company's infamous stickiness with enterprises is bearing fruit once again.
Nadella also emphasized that AI demand continues to outpace supply, despite the ongoing investments into data centers and other infrastructure. Microsoft's hefty AI investments have been a legitimate concern, and the stock's slide has much to do with questions regarding whether the company can generate a sufficient return on all that spending. Nadella has repositioned Microsoft as a more cost-effective AI provider, leaning harder into its own silicon and frontier models.
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