Investors responded decisively to the upbeat results and bullish AI outlook. Microsoft’s shares spiked over 7% in after-hours trading, pushing the stock toward record highs and lifting Microsoft’s market capitalization past the $4 trillion mark—cementing its place as one of just two companies to reach that level globally, along with Nvidia. The reaction underscored Wall Street’s confidence in Microsoft’s strategy, particularly its aggressive investments in cloud infrastructure and its push to commercialize AI tools such as Copilot across its productivity and developer platforms.

Nadella was emphatic in the earnings press release: “Cloud and AI is the driving force of business transformation across every industry and sector. We’re innovating across the tech stack to help customers adapt and grow in this new era.”

On the subsequent earnings call, one analyst expressed surprise at the size of the results. “Satya, back to the strength across the board in the quarter… It’s just the magnitude of upside that has shocked many here.”

To that point, the company’s Intelligent Cloud segment—home to Azure—generated $29.9 billion in revenue, up a robust 26%. Azure and other cloud services revenue soared 39% for the quarter, while annual Azure revenue surpassed $75 billion, growing 34% year-over-year. Nadella cited major enterprise customers leveraging both traditional and AI-powered workloads on Azure, highlighting that this is no longer just about experimentation—companies are moving quickly to deploy AI at scale.

Nadella claimed on the analyst call that “we continue to lead the AI infrastructure wave and gained market share every quarter this year,” noting that Microsoft operates more data centers than any other cloud provider, having opened new facilities across six continents. He said it operates over 400 data centers across 70 regions.

Strength across the board

The Productivity and Business Processes segment, anchored by Microsoft 365 and LinkedIn, generated $33.1 billion (+16%), and More Personal Computing brought in $13.5 billion (+9%), bolstered by a rebound in devices demand and rising Xbox content revenue. Throughout fiscal 2025, Microsoft amassed $281.7 billion in revenue (+15%) and $101.8 billion in net income (+16%). The company also returned $9.4 billion to shareholders in the fourth quarter through dividends and buybacks.

CFO Amy Hood emphasized Microsoft’s operational discipline and the scaling of AI investments, and revealed on the earnings call that the company expects over $30 billion of capital expenditure for the first quarter of 2026, “driven by the continued strong demand signals we see.

When asked about the return on investment on this massive spending, Hood responded that Microsoft has $368 billion of contracted backlog across the “breadth of the Microsoft Cloud,” not just Azure. She added that she feels very confident that this spending is “directly tied to business that is already contracted and on the books — and that we need to deliver.”

Hood also reassured employees and investors of the company’s forward momentum, noting in an internal post-earnings memo, as reported by Business Insider, that “FY26 will require intensity, clarity, and bold execution,” reflecting both the opportunities and competitive pressures ahead as Microsoft doubles down on AI and security priorities.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.