Microsoft Corporation (MSFT) shares closed at $450.24 on Friday, posting a robust 5.45% gain as renewed investor enthusiasm for artificial intelligence drove Wall Street's major indexes to new all-time highs. The stock's advance came on heavy trading volume of 77.3 million shares, though after-hours activity was subdued, with the stock last changing hands at $449.99.
The rally was part of a broader surge in AI-related technology stocks that lifted the Nasdaq Composite by 0.21% to 26,972.62, the S&P 500 by 0.22%, and the Dow Jones Industrial Average by 0.72%. For the week, the Nasdaq gained 2.39%. The positive sentiment was fueled by a shift in investor perception, viewing AI spending as a driver of future profits rather than merely a cost burden.
“There’s definitely euphoric sentiment in the market around AI. The rally has really been driven by earnings,” said Ohsung Kwon, chief equity strategist at Wells Fargo, in a Reuters report. The sector received an additional lift from Dell Technologies, which surged 32.8% after raising its full-year outlook.
Microsoft’s strong performance was underpinned by its fiscal third-quarter results, which showed revenue rising 18% to $82.9 billion. Microsoft Cloud revenue climbed 29% to $54.5 billion, and CEO Satya Nadella highlighted that the company’s AI business had surpassed a $37 billion annual run rate. However, the company’s gross margin percentage declined due to heavy investments in AI infrastructure and higher product usage costs. Operating expenses also rose, driven by increased research and development spending on AI talent and data center costs.
Looking ahead, Microsoft is set to introduce new Windows PCs featuring Nvidia chips as the primary processor, according to a weekend report from Axios via Reuters. The devices, which include Microsoft’s Surface line and models from Dell and other partners, are expected to launch next week. Microsoft also plans to showcase software that enables AI agents to run directly on Windows machines.
Despite the positive momentum, Microsoft faces intensifying competition. Google Cloud’s growth outpaced Azure in the latest quarter, and Amazon now offers OpenAI’s latest models and Codex coding tool on its cloud platform, eroding Microsoft’s exclusive access to OpenAI technology. Microsoft CFO Amy Hood told analysts that the company is “confident in the return” from its AI investments, citing rising demand and product adoption.
Analyst Keith Weiss of Morgan Stanley maintained an Overweight rating and a $650 price target on Microsoft, noting that the company is “deploying AI-specific capacity ahead of the associated monetization cycle,” as reported by TipRanks. Weiss’s view is that Microsoft is spending now to build out its data centers, banking on future revenue growth.
The stock now trades on whether AI infrastructure investments will translate into high-margin software sales. With a $190 billion capital spending plan on the line, any signs of a weaker-than-expected rollout of AI products among large enterprise clients could test investor patience. Market participants will be watching closely for any shifts in sentiment, particularly if inflation or rising yields push investors away from big tech names.
