Microsoft Stock Rises: AI Boom Boosts Profits – Alphabet Loses Money

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Microsoft shares rise: AI boom boosts profits – Alphabet loses money.

At a Glance

Microsoft started the 2026/2027 fiscal year stronger than expected: Profit rose by 32 percent to $36.6 billion, while Azure revenue grew by nearly 20 percent to $92.3 billion.

The stock initially rose 5 percent to $552 in after-hours trading. The comparison with Alphabet also shows the downside of the AI boom: At the latter, high AI spending is fueling concerns about an operating loss.

On Wednesday after the US market close, Microsoft announced the figures for the start of the 2026/2027 fiscal year in Redmond. The result was a clear step forward: Microsoft recorded a sharp increase in profit, driven by growth in its Azure cloud platform. At the same time, investments remained below analysts’ expectations—a point that was received particularly positively on the stock market.

Microsoft thus provides a concrete example of how the AI boom can translate into business during the current financial year. Profit did not merely increase; cloud revenue also rose significantly. The stock responded accordingly. According to Manager Magazin, it was trading 45 minutes after the figures were released 5 percent above its regular-session level.

Azure Provides the Main Growth Impulse

The Azure cloud platform is the central driver of the figures. Microsoft’s revenue increased by almost one-fifth to $92.3 billion. Growth therefore came from an area in which Microsoft brings together demand for cloud services and AI infrastructure. The report consequently describes Microsoft as having started better than experts had expected.

Capital expenditure also remained below the level the market had feared. Microsoft surprised positively with its investments. This is important for the stock’s reaction: The company did not have to increase spending on AI expansion to the same extent to exceed expectations for revenue and profit.

Chief Financial Officer Amy Hood summarized the start of the year as follows:

“We started the 2026/2027 fiscal year well. The financial figures exceeded expectations for revenue as well as operating income and net profit.”

According to the report, the figures exceeded analysts’ estimates for revenue, operating income and net profit. The announcement was therefore not merely an indication of potential AI-driven profits. It already demonstrated results achieved in the first part of the new fiscal year.

Profit Rose 32 Percent to $36.6 Billion

Net profit of $36.6 billion was the most striking figure in the announcement. Profit climbed by 32 percent, clearly exceeding analysts’ expectations. Together with Azure revenue of $92.3 billion, this presents a picture of Microsoft entering the 2026/2027 fiscal year with strong growth.

The analysts’ assessment was correspondingly positive as well:

“They provided a counterweight to the financial results of internet giant Alphabet and Facebook parent Meta.”

The report therefore emphasizes not only the individual figures, but also their combination: high cloud revenue, higher profit and, at the same time, investment below expectations.

According to Manager Magazin, Microsoft’s current market capitalization of around $4 trillion makes it one of the world’s most valuable companies. Against this backdrop, the jump to $552 in after-hours trading is also a move at the upper end of the market-cap range.

Alphabet Shows How Expensive AI Expansion Can Become

The comparison with Alphabet and Meta provides the counterpoint to Microsoft’s announcement. At the two internet giants, quarterly results fueled concerns that the expansion of AI infrastructure could prove to be an operating loss. According to the report, Alphabet spent billions on high AI expenditure, and its stock fell by double digits.

This makes the central message of the report clearer. For Microsoft, the AI boom is already associated with rising profits during the current financial year. For Alphabet, the same trend is initially generating high costs and doubts about the profitability of the investments made. The market therefore rewards not only spending on AI, but also the question of whether it is already generating revenue and profit.

The strongest counterpoint to this positive assessment of Microsoft is that the company is already very large, with a market capitalization of around $4 trillion. A positive reaction to a quarterly report therefore does not prove that every further expansion in AI will translate into profit just as immediately. What is certain is that Microsoft exceeded expectations for revenue and profit, while Alphabet’s financial results triggered concerns about an operating loss.

The Stock Approaches Its Previous Record High

Microsoft initially rose 5 percent to $552 in after-hours trading. Its share price had subsequently risen to more than $560. According to the report, the previous record high was a little above $555, reached in summer 2025.

If the stock rises by a similar amount on Thursday, it could surpass this record high. That expectation makes the comparison with Alphabet particularly compelling: On one side, Microsoft is posting rising profits and a positive stock-market reaction, while on the other, Alphabet illustrates the consequences of high AI spending.

The announcement is therefore not a general indication of the AI boom. It uses a specific quarterly report to show how differently the financial results of two major technology companies can look. Microsoft’s start to the 2026/2027 fiscal year brought 32 percent more profit, $92.3 billion in revenue and initial stock gains of 5 percent. By contrast, Alphabet is facing billions in AI spending whose profitability, according to the report, still raises doubts.