Riding the Cloud: Microsoft’s Earnings Beat Powers a 9% Stock Surge

Microsoft’s strong quarterly numbers not only gave its own share price a big boost, but also helped lift the wider stock market. After Microsoft and Meta beat profit forecasts, the Nasdaq jumped, the S&P 500 rose, and even the Dow hit its longest winning run of the year. Let’s break down what happened, why Microsoft shone so brightly this time, and what the wider signals mean for investors.

A Bright Day for Big Tech

Late on Wednesday, two of the biggest names in tech—Microsoft and Meta—shared quarterly results that were better than most people expected. That good news sent their stock prices sharply higher the next morning: Microsoft popped nearly 9%, and Meta climbed about 6%. Because these companies weigh heavily on the tech-focused Nasdaq Composite, the whole index leapt more than 2%. The broader S&P 500 also gained about 1.4%, while the Dow Jones Industrial Average added roughly 0.7%—its best stretch of daily wins so far this year.

The reason this mattered so much is that investors had been worried about how new U.S. trade policies might affect big technology names. With a fresh round of tariffs in the air, many feared that companies would pull back on spending for cloud services, artificial intelligence (AI), and online ads. But when Microsoft and Meta showed they had weathered those fears better than expected, traders rushed back into tech stocks, driving up prices across the board.

Microsoft’s Standout Quarter

Earnings and Revenue Beats

Microsoft’s results for the quarter were solid. The company posted adjusted earnings of $3.46 per share on revenue of $70.1 billion. In simple terms, that means Microsoft made more money per share than analysts had predicted ($3.22 per share) and brought in more total revenue than expected ($68.4 billion). Compared to the same quarter a year earlier, profits rose from $2.94 per share, while sales climbed from $61.9 billion. In short, Microsoft showed healthy growth across the board.

Cloud Growth Accelerates

The real star of Microsoft’s report was its cloud business, known as Azure. Cloud revenue overall rose 20% to $42.4 billion, but Azure itself grew even faster—33% year over year. That was up from 31% growth in the previous quarter, and it topped Wall Street’s forecasts. Microsoft also gave strong guidance for the next quarter, expecting Azure growth to stay in the mid-30% range.

This acceleration came partly thanks to artificial intelligence projects. Microsoft said that AI workloads added 16 percentage points to Azure’s growth last quarter. But even without AI, Azure was humming along as businesses moved more of their work into the cloud.

Copilot and AI Take Center Stage

Beyond raw cloud numbers, Microsoft highlighted another bright spot: Copilot, its AI assistant built into products like Microsoft 365 (Word, Excel, Outlook, and more) and the GitHub coding platform. Executives noted that more companies are buying Copilot seats and rolling the tool out to larger numbers of employees. As deal sizes grow and more users come on board, Copilot is becoming an important part of Microsoft’s revenue picture.

At the same time, Microsoft said it was moderating its capital spending—meaning it didn’t rush out to build more data centers or hardware at a breakneck pace. That suggests the company is finding a balance between investing in future growth and keeping costs under control.

Why the Stock Jumped So Much

When a big company like Microsoft beats expectations on both earnings and revenue—and then raises its forecast—it can trigger a strong stock reaction. In fact, if the 9.2% gain holds through the close, it would mark Microsoft’s best one-day rise after earnings since September 2015.

That rally added about $270 billion to Microsoft’s market value, pushing it past Apple to become the most valuable U.S. company, with a market cap of roughly $3.21 trillion. Investors cheered because strong cloud growth and AI adoption suggest Microsoft can keep growing at a healthy pace, even if the wider economy slows down.

Other Tech Leaders Weigh In

Microsoft and Meta set the tone, but all eyes now turn to Apple and Amazon, which report their results after the market closes on Thursday. Both have faced scrutiny over tariffs: Apple is moving some iPhone production out of China, and Amazon promised not to pass higher import duties on to customers. Positive reports from those giants could extend this tech rally even further.

Meanwhile, earlier this week Google’s parent company, Alphabet, and other major software names also showed that demand for cloud services and digital ads remains sturdy. On the whole, big tech seems to be shrugging off trade worries so far.

Trade Tensions and Market Mood

One reason markets have been on edge is the ongoing trade dispute between the U.S. and China. President Trump has threatened new tariffs on a wide range of Chinese goods, and Beijing has warned it could retaliate. Higher duties can raise costs for companies and cut into their profits.

Yet some positive signals have emerged. Reports say U.S. officials have quietly reached out to Beijing to explore talks, and there may be a first batch of deal announcements coming soon. If true, that would ease one of the biggest worries facing investors today.

At the same time, the President has insisted that Chinese President Xi Jinping must make the first move to de-escalate. So far, neither side has backed down publicly. Investors will be watching closely for any official statements or fresh tariffs in the days ahead.

Mixed Economic Signals

Even as stock markets rallied on tech news and hopes of a trade thaw, some economic data painted a mixed picture. U.S. GDP data showed the economy contracted slightly in the first quarter, raising concerns about a slowdown. On the jobs front, weekly unemployment claims ticked up to a two-month high, and continuing claims were the highest since late 2021.

Those numbers set the stage for Friday’s much-watched monthly jobs report. If the data show a weakening labor market, it could cool investor enthusiasm. But for now, the strong earnings from the likes of Microsoft are helping to override those worries.

What’s Next for Investors?

With Microsoft, Meta, and other big tech names beating profit forecasts, investors are feeling more confident about the sector’s health. If Apple and Amazon also deliver good numbers, the tech rally could extend further.

At the same time, traders will keep an eye on U.S.-China talks and any new tariff moves. They’ll also watch key economic reports—like jobs and growth figures—to see if the broader economy can stay on track.

For now, Microsoft’s standout quarter shows that strong cloud growth and rising AI demand can keep fueling the company’s progress, even amid uncertainty. That combination of robust results and clear guidance is what sparked the stock’s big jump—and why some analysts are now rethinking their earlier downgrades.

In simple terms, when a company delivers on its promises and shows a path to even more growth, investors take notice. Microsoft did just that, and on this trading day, its gains helped lift the whole market skyward.