Image source: Microsoft.

What: Shares of software giant Microsoft (MSFT -0.61%) jumped 10.8% in July, according to data provided by S&P Global Market Intelligence. Microsoft's fiscal fourth-quarter report, which featured an across-the-board beat driven by strong cloud growth, was largely responsible for pushing the stock price higher.

So what: Microsoft reported adjusted revenue of $22.64 billion during the fourth quarter, up 2% year over year and about $460 million higher than the average analyst estimate. GAAP revenue, which excludes about $2 billion related to Windows 10 revenue deferrals, slumped 7% year over year.

Microsoft's productivity and business processes segment grew by 5% year over year, driven by 54% growth in Office 365 commercial revenue. Intelligent cloud revenue grew 7%, with Azure revenue more than doubling year over year. Azure is widely considered the second largest player in the cloud infrastructure market behind Amazon Web Services, although Microsoft doesn't disclose Azure revenue directly.

Non-GAAP EPS came in at $0.69, up from $0.62 during the prior-year period and $0.11 higher than the average analyst estimate. Operating income declined in both the productivity and business processes segment and the intelligent cloud segment, but it was offset by a 59% jump in the more personal computing segment.

Now what: Microsoft continues to be a company in transition. The growth of cloud computing has required Microsoft to make major investments and changes over the past few years, knocking down profitability, but investors seem happy with the results. Office 365 is growing rapidly, allowing the company to maintain its dominance in the productivity software market, and Azure is more than doubling revenue each year. That growth rate will necessarily slow as Azure becomes larger, but Microsoft is making progress catching up to the market leader.

All technology companies that hope to stand the test of time need to be able to adapt, and Microsoft is doing just that. Weak spots like the phone business continue to be a disappointment, but the rapid growth of Microsoft's various cloud businesses gave investors enough confidence to push the stock higher in July.