Microsoft Corp. (MSFT.O): Delivers On The Q4 Investors Were Hoping For

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Microsoft Corp. (MSFT.O): Delivers On The Q4 Investors Were Hoping For

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29 Jul 2026 17:32:37 ET │ 13 pages

Microsoft Corp. (MSFT.O)

Delivers On The Q4 Investors Were Hoping For

CITI'S TAKE

Buy Microsoft delivered an impressive Q4 with a larger than typical

top/bottom line beat, led by strength in its most strategic businesses Price (29 Jul 26 16:00) US$390.54

(Azure + Office/Copilot). Importantly, Azure growth returned to an Target price US$570.00

outsized beat (3–4pt beat) with 43% Y/Y cc representing the fastest Expected share price 46.0% growth in four years and accelerating 4pts QoQ. Within Office, Copilot return

paid seats grew +10M QoQ vs last Q's 5M and our 8M, likely setting the Expected dividend yield 0.9%

stage for accelerating M365 guidance. Cost and capex discipline was also Expected total return 46.9%

on display, with COGS /capex in line with guidance despite the significant

Market Cap US$2,901,101M revenue outperformance. While there was no obvious shortfall when

examining the preliminary results, we would argue the Q4 Commercial

bookings growth of 18% (ex-OpenAI) vs guidance of healthy growth with

expiry base looks a bit underwhelming in the context of 27% Y/Y Microsoft Tyler RadkeAC

cloud growth. Guidance and capex commentary will be key items to watch +1-415-951-1660

on the 5:30pm ET call. tyler.radke@citi.com

Yitchuin Wong

4Q26 Highlights — Revenue grew 18% y/y to $90B, 3% above consensus and yitchuin.wong@citi.com

above prior guidance of $86.7–87.8B, with all three segments ahead. Gross profit of

Andrew Girard, CFA$60.5B beat consensus by 4%, while gross margin of 67.2% was ~90bps ahead.

Operating income of $40.6B beat by 5% and operating margin reached 45.1%, andrew.girard@citi.com

~80bps above consensus.