Microsoft (NASDAQ: MSFT) stock has been on quite a run since the company reported its results for the fourth quarter of its fiscal 2026 (which ended June 30). Microsoft delivered those results after the close of trading on July 29, and investors sent the stock skyrocketing the following day. They have continued bidding the stock higher, and it's now up by an impressive 26% since the report came out.
That's a huge run in a short time frame, and for a company as large as Microsoft, it may make investors feel like they've missed the boat. So, is it too late to buy shares for now? Or is this rally an indication of something new?
This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia.
Continue » Microsoft is a major software company that is also diving deep into AI. It is exposed to AI in two ways: its internal products and its cloud computing business. Microsoft Copilot is its in-house AI tool meant to provide general AI use and also interface with the Office suite of productivity titles.
This product reached over 30 million paid seats in the quarter, showcasing strong growth. However, cloud computing is more of a focus area for investors. Microsoft Azure continued to grow rapidly, with revenue rising 43% year over year.
To make money, though, it must build cloud computing capacity and infrastructure, which is why Microsoft is spending hundreds of billions of dollars on data centers. While some of Microsoft's hyperscaler competitors, like Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), recently increased their already lofty spending capex expectations for 2026, Microsoft left its capex guidance unchanged. The market is worried that the AI hyperscalers may be overspending on their data center build-outs, so the news that Microsoft was not planning to further accelerate its outlays this year likely helped bolster its share price.
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