Microsoft (MSFT) Stock: Climbs as AI Demand Drives Data Center Expansion

TLDR

• Microsoft stock gains as AI demand supports rapid expansion of global data centers
• Azure growth accelerates as Microsoft adds capacity across key global regions
• Microsoft commercial backlog reaches $678 billion as cloud demand remains elevated
• Capital spending rises as Microsoft expands infrastructure to support AI growth
• Microsoft targets double-digit growth while keeping margin pressure limited

Microsoft shares rose 1.16% to $488.83 after rebounding from an intraday low near $482.50 during midday trading. The stock approached $490 as cloud growth and infrastructure expansion supported stronger trading during the session. Microsoft continues scaling data centers because contracted demand remains well above its available computing capacity for cloud and AI workloads.

Microsoft Corporation, MSFT

Microsoft returned 15.5% during the past three months, compared with 3.1% for the S&P 500. However, the stock remains down 3.5% over twelve months and roughly 10% below its 52-week high. Commercial obligations reached $678 billion after large OpenAI contracts, more than twice trailing twelve-month revenue of $331.84 billion.

Microsoft expects roughly 30% of that backlog to convert into revenue within the next twelve months. Commercial backlog rose 84% year over year, while growth excluding OpenAI reached 25% on the same basis. Microsoft 365 Copilot paid seats also exceeded 30 million, up from more than 20 million one quarter earlier.

Data Center Expansion Lifts Azure Capacity

Microsoft continues expanding infrastructure because customer demand remains above available computing capacity across major operating regions. The company added 31 data centers across five continents during fiscal fourth quarter 2026. Across the full fiscal year, Microsoft opened 88 data centers to increase cloud capacity and support additional workloads.

Microsoft also reduced GPU dock-to-live times by nearly half across its largest operating regions. Faster deployment increased available computing resources and improved service throughput during the year. Management said efficiency improvements create revenue benefits within the same quarter as new capacity becomes available.

Azure revenue grew 43% as reported during fiscal fourth-quarter 2026, improving from 40% during the previous quarter. Microsoft guided fiscal first-quarter 2027 Azure growth to roughly 45% in constant currency. The guidance reflects continued expansion while the company adds infrastructure across major global regions.

Capital Spending Tests Margin Discipline

Microsoft spent $41 billion on capital expenditures during fiscal fourth quarter 2026 alone. The spending supported data centers, computing equipment, and other infrastructure required for continued cloud expansion. Management expects capital expenditures to increase again during fiscal 2027 as capacity development continues across its network.

The company expects fiscal 2027 revenue and operating income to grow at double-digit rates. It also expects full-year operating margin to decline by less than one percentage point. Meanwhile, trailing twelve-month operating margin stands at 46.8%, matching its three-year peak level.

Windows OEM and Devices revenue will create a separate drag during fiscal 2027 overall. Microsoft expects that segment to decline in the high teens for the full fiscal year. It also expects a low-20% decline during fiscal first-quarter 2027 while cloud infrastructure remains the primary growth engine.

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