Microsoft stock continues to show potential for market-beating returns, despite its massive market cap of $3.81 trillion. The growth in Microsoft’s cloud business, particularly Azure, is a key driver for the stock, with cloud revenue reaching $49 billion last quarter, up 26% year over year. Azure’s revenue growth of 40% indicates strong demand for AI services, positioning Microsoft well for future growth.

Investors can expect Microsoft’s cloud business to see accelerating growth as it adds more data center capacity, with remaining performance obligations growing 50% year over year to almost $400 billion. This growth reflects a broader demand for AI services, making Microsoft a top cloud service provider poised to capitalize on the increasing demand for AI over the next decade. Despite limited data center capacity relative to demand, Microsoft’s cloud business is expected to fuel the stock in 2026.

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