Shares of Microsoft (MSFT) soared more than 8% on Wednesday following a blockbuster Q3 2025 earnings report that blew past Wall Street expectations.
The stronger than expected report reignited confidence in the company's cloud growth story and more importantly confidence in the Mag Seven Stocks.
Microsoft stock is trading at fresh multi-month highs on heavy trading volume following the company’s largest earnings-per-share beat Microsoft has posted in the past six quarters.
For the March quarter, Microsoft delivered revenue of $70.07 billion, up 13.3% year-over-year.
Those numbers not only beat consensus estimates but marked the first time the company crossed the $70 billion revenue milestone in a single quarter.
The company’s Earnings per share also came in well ahead of expectations, fueled by strong execution across all three of its business segments.
The undisputed standout of the report was Azure.
The company’s cloud platform posted a 35% growth rate in constant currency (CC), well above its prior guidance range of 31–32%. While Microsoft’s AI-powered Azure services were expected to perform well, the real surprise was the strength in the non-AI Azure business, which had stumbled in Q2 but rebounded sharply this quarter.
The Azure results also put fears that the company’s data center expansion may continue, despite reports last month that Microsoft was in the process of reviewing it’s plans due to economic uncertainty.
Looking ahead, Microsoft guided Azure revenue growth in Q4 to 34–35%, upping analyst expectations and signaling robust demand for AI. The company’s management warned of potential AI capacity constraints beyond June, underscoring how quickly demand for its AI infrastructure is ramping.
Microsoft’s other business segments also exceeded prior guidance. The current hiring slowdown continued to impact LinkedIn’s Talent Solutions unit, but strength elsewhere more than offset that weakness.
In short, Microsoft delivered one of its strongest quarters in recent memory. Azure’s upside surprise and continued momentum in AI set the tone not only for Microsoft but potentially for peers like Amazon’s AWS, which reports earnings later this week. For investors concerned about slowing enterprise tech spending, Microsoft's results just sent a very different message.
Today’s surge in prices shot Microsoft stock back above its 50- and 200-day moving averages. Both of those key trendlines are in bearish trends, however that is likely to change over the course of the next few weeks if Microsoft holds these gains.
Historically, the stock has only seen 27 instances of single day returns more than 8% since the stock started trading in 1990.
Two of these “signals” have happened within the last month of trading, today and April 9 when shares of Microsoft rallied for gains of 10.13%. That rally was triggered by the White House’s announcement of the 90-day delay of Tariffs to allow for countries to negotiate with the U.S..
On average, Microsoft stock trades higher following these unusually strong performance days with the stock averaging gains of 3.7% over the following 30 trading days.
Investors should note that there is a short period when Microsoft shares drop an average of 1.5% just after the initial move higher. This phenomenon is likely due to short-term traders “selling the news” or short-term strength. Beyond that, the stock posts better than average return trends.
Due to the market’s current volatility and negative trends, I’ve isolated the “Bear Market Signals” (11 of 27) to gauge whether there is a more active effort for investors to sell into the strength.
Those eleven instances, while still positive over the following month, do see a lower return at the end of the one-month trading period. This suggests that the broader market forces put additional selling pressure on the stock, muting its 30-day returns.
Today’s move puts Microsoft shares back above their 20-month moving average after the stock broke below this delineator of bull and bear market trends. Shares will need to remain above $400 to maintain a long-term bull market outlook with a long-term price target of $500.
