Microsoft Cloud hits $63.9bn as Copilot and AI agents grow

Microsoft (MSFT) stock fell 2.8% in the year to October 30, 2026, despite an 18.8% revenue increase in fiscal Q1 2027. The company's commercial backlog grew 73% to $677 billion, with Azure revenue up 48%. Management cited strong demand and supply constraints as key factors. The Intelligent Cloud segment made up 41.5% of revenue in fiscal 2026, with Microsoft Cloud revenue reaching $63.9 billion in Q1 2027. The stock is 4.0% below its highest close of the past year.

Microsoft reported a quarterly profit of $36.6 billion, with revenue up 19% to $92.3 billion, driven by a 30% increase in cloud computing revenue. The company offered buyouts to 60,000 employees. Shares rose 2.9% in after-hours trading. Microsoft is investing heavily in AI infrastructure, which may impact future earnings.

Microsoft plans to raise $25B via a bond sale, its first in over nine years, to fund AI infrastructure. This follows strong Q1 results, with $92.28B revenue, $4.89 EPS, and 48% Azure growth. Azure revenue reached $33.17B, exceeding estimates. Free cash flow was $18.6B, above expectations. The company expects Azure growth of 49-50% in Q2, higher than analyst forecasts. Microsoft aims to capture demand for AI-related cloud infrastructure.

Intel's weak guidance caused its shares to drop 29% on Friday, impacting U.S. and Asian markets. Taiwan's TAIEX index fell 812 points at open, with TSMC shares dropping below NT$2,310. Other tech stocks also declined, including AMD, Qualcomm, and Nvidia. Analysts attribute the sell-off to concerns over AI-related capital spending and U.S. economic data.

Microsoft reported a 27% drop in Windows OEM revenue, driven by slower PC demand. The decline is attributed to users delaying upgrades due to high costs and component prices. Forecasts suggest further declines of 20-30% next quarter, raising concerns about Microsoft's strategy.

The Nasdaq Composite fell 2.86% on Friday, led by selloffs in Alphabet (down 12%) and Intel (down 28%), exposing concentration risk in tech-heavy indices. The S&P 500 also dropped 1.8%, while the equal-weighted RSP ETF gained 5% in October. Investors are concerned about AI spending and slowing growth in core businesses. Nvidia, Apple, and other tech giants saw significant declines, with Nvidia losing its title as the world's most valuable company.