Microsoft Stock Soars After Q4 Earnings: Is It Too Late to Buy MSFT?

Microsoft's Q4 earnings beat expectations, with revenue and earnings surpassing guidance. Shares surged 9% in extended trading and hit a session high above $555. The company faces data center infrastructure constraints, but remains committed to AI investment, with annualized spending potentially exceeding $120 billion. Despite strong growth, the question remains whether it's too late to buy MSFT stock.

Microsoft Corporation (MSFT) delivered robust fourth-quarter (Q4) fiscal 2025 earnings, with revenue and earnings per share (EPS) exceeding analyst expectations. The company's shares surged 9% in extended trading, reaching a session high of $555.45, pushing its market capitalization past $4 trillion [1].

Microsoft reported EPS of $3.65, surpassing the Zacks Consensus Estimate of $3.37, and revenue of $76.4 billion, which was 3.4% above estimates. The standout performer was Azure, Microsoft's cloud computing platform, which achieved a 39% year-over-year (YoY) increase in revenue, well above the 34% forecast by analysts [2].

The company's operating income (GAAP) increased by 23% to $34.3 billion in Q4 FY2025, and net income rose 24% to $27.2 billion compared to the prior-year period. This strong financial performance was driven by accelerating demand for Azure and other cloud services, with customers in every industry expanding their footprints on the platform [1].

Despite the impressive results, Microsoft faces data center infrastructure constraints. The company has been expanding its datacenter capacity, adding more than two gigawatts of new capacity over the past 12 months, but the growth may not keep pace with demand [2].

Microsoft remains committed to its AI investment strategy, with annualized spending potentially exceeding $120 billion. The company's AI momentum extends beyond infrastructure, with Microsoft 365 Copilot for commercial customers and the consumer Copilot in Windows reaching 100 million monthly active users [2].

Looking ahead, Microsoft's guidance suggests continued strength. The company projected fiscal first-quarter 2026 revenues between $74.7 billion and $75.8 billion, with Azure revenues expected to grow approximately 37% at constant currency (cc) in the upcoming quarter [2].

The question remains whether it's too late to buy MSFT stock. While the company's strong performance and market leadership in cloud computing and AI are compelling, the high valuation and potential infrastructure constraints may pose risks for investors.

References:
[1] https://www.ainvest.com/news/microsoft-shares-reach-time-high-q4-earnings-report-2508/
[2] https://finance.yahoo.com/news/msft-q4-earnings-beat-cloud-163200423.html