Microsoft Stock & Earnings: Q1 Results, Lawsuit & Analyst Views
- Microsoft’s stock price rose following the release of its first-quarter earnings report on Wednesday, despite facing some investor concerns.
- Net income reached $27.7 billion on a GAAP basis, a 12% increase, and $30.8 billion on a non-GAAP basis, a 22% increase.
- “Our planet-scale cloud and AI factory, together with Copilots across high value domains, is driving broad diffusion and real-world impact,”
Microsoft’s stock price rose following the release of its first-quarter earnings report on Wednesday, despite facing some investor concerns. The company reported revenue of $77.7 billion, an 18% increase compared to the same period last fiscal year, and operating income of $38.0 billion, a 24% increase.
Net income reached $27.7 billion on a GAAP basis, a 12% increase, and $30.8 billion on a non-GAAP basis, a 22% increase. Diluted earnings per share were $3.72 on a GAAP basis, up 13%, and $4.13 on a non-GAAP basis, up 23%. These results exceeded expectations across revenue, operating income, and earnings per share, according to Microsoft.
“Our planet-scale cloud and AI factory, together with Copilots across high value domains, is driving broad diffusion and real-world impact,”
Satya Nadella, chairman and chief executive officer of Microsoft
The non-GAAP results exclude the impact from investments in OpenAI. Microsoft continues to invest heavily in AI, both in capital and talent, to capitalize on the significant opportunities ahead.
“We delivered a strong start to the fiscal year, exceeding expectations across revenue, operating income, and earnings per share,”
Amy Hood, executive vice president and chief financial officer of Microsoft
Hood attributed the strong performance to continued strength in the Microsoft Cloud, reflecting growing customer demand for the company’s platform.
Investor Concerns and Market Reaction
Despite the positive earnings report, Microsoft’s stock experienced a slight dip in pre-market trading, falling by 1%. This initial reaction suggests that investors were closely scrutinizing specific aspects of the report, potentially focusing on the growth rate of Azure, the company’s cloud computing platform. Recent reports indicated investor concern when Azure revenue grew “only” 39% year over year.
However, the stock recovered and ultimately rose following the full release of the earnings data. The initial investor hesitation highlights the high expectations surrounding Microsoft’s cloud and AI initiatives.
Legal Challenges and Market Position
Microsoft is currently facing a significant legal challenge, with approximately 60,000 individuals filing a lawsuit against the company seeking 30 billion kroner (approximately $2.8 billion USD). The details of this lawsuit were not specified in the available sources.
The company’s market capitalization stands at $2.76 trillion as of April 10, 2026, with its stock closing at $370.87 per share on that date. Over the past 52 weeks, the stock has experienced a loss of 4.37%, while the one-month return was -7.27%.
Contrarian Viewpoint
Michael Burry, known for his contrarian investment strategies, is reportedly going against the prevailing trend in the tech sector. However, the specific details of his position on Microsoft were not provided.
Mar Vista Investment Partners, LLC, in its first-quarter 2026 investor letter, noted that U.S. Equities entered 2026 with sustained momentum, but this was hampered by factors including tariff uncertainty, doubts about AI-driven growth sustainability, and emerging private credit concerns, before geopolitical challenges. The firm’s U.S. Quality strategy returned -7.24% net-of-fees in the quarter, underperforming the Russell 1000® Index’s -4.18% and the S&P 500® Index’s -4.33% returns.