Microsoft Corp (NASDAQ:MSFT) latest results landed with the force of a Raphinha shot from the edge of the box, at least according to analysts at Wedbush.
After markets closed on Wednesday, the tech giant beat forecasts across the board, raised guidance, and made it clear that the AI boom is more than just hype.
For UK investors, many of whom hold Microsoft indirectly through global funds, tech ETFs, or pension schemes, the update is an important signal that Big Tech’s earnings engine is still firing.
Cloud and AI are doing the heavy lifting
Azure, Microsoft’s cloud platform, grew 33% year-on-year, comfortably ahead of expectations. Crucially, AI-related services accounted for just under half of that growth.
In other words, Microsoft is already seeing real demand for the AI tools it has embedded across its cloud offering. Wedbush estimates that for every $100 a business spends on Azure, it is now spending an additional $40 on AI-related services.
Capex is rising... and that’s a good sign
Some investors had been worried about reports of cancelled data centre projects, but Microsoft’s results appear to put those fears to rest. The company is pressing ahead with its buildout plans and reaffirmed its full-year capital expenditure guidance of $80 billion.
It also expects spending to keep rising into next year, which Wedbush sees as a clear vote of confidence in the AI opportunity. The demand, they say, is there, and Microsoft is scaling to meet it.
Fourth quarter guidance tops forecasts
Microsoft’s forward guidance was also a crowd-pleaser. The company expects Azure revenue to grow by 34% to 35% in constant currency in the current quarter, versus Wall Street’s forecast of 31.5%
Cloud revenue is expected to land between $28.75 billion and $29.05 billion (again ahead of estimates), while its productivity division (which includes Office 365) is expected to bring in more than $32 billion.
Even the personal computing division, which includes Windows and hardware, is set for a surprise uplift.
UK investors are already exposed, but more may want in
With a market cap nearing $3 trillion, Microsoft is a top holding in almost every global equity fund and large-cap tracker.
If you own an S&P 500 ETF, a tech-focused investment trust like Polar Capital Technology, or even a general global growth fund, chances are you already have exposure.
Wedbush raised its price target from $475 to $515 and maintained its 'outperform”rating.
It’s not hard to see why.
Despite macro turbulence, Microsoft is showing it can do more with less, helping customers save money while embedding its AI tools deeper into their operations.
The AI revolution is real, and Microsoft is firmly in the driving seat.
For long-term UK investors, this is one US titan still worth watching very closely.