Microsoft (MSFT) Q1 2026 earnings report

Microsoft reported better than expected results. first quarter of fiscal year Revenue from the company’s Azure cloud business increased by 40%. The stock fell in extended trading.

• Earnings per share: $3.67 per share compared to expected $4.13 adjusted
• Revenues: 77.67 billion dollars, while the expectation was 75.33 billion dollars

Revenue rose 18% in the fiscal first quarter from $65.6 billion a year ago, according to the statement. Net income rose to $27.7 billion, or $3.72 per share, from $24.67 billion, or $3.30 per share, in the same period last year.

Microsoft said its investment in OpenAI led to a $3.1 billion hit to net income in the quarter, equivalent to 41 cents per share.

Microsoft’s Intelligent Cloud unit, which includes Azure, reported revenue of $30.9 billion, up 28% from a year ago and above the StreetAccount consensus of $30.25 billion. Growth competing with Azure Amazon Web Services and Google Cloud also beat forecasts, as analysts polled by StreetAccount predicted growth of 38.2%.

Cloud remains the biggest driver of growth at Microsoft; as business has proven to be one of the biggest beneficiaries of the AI ​​boom. Last quarter, Microsoft disclosed the scale of its Azure cloud infrastructure business in dollar terms for the first time. The company said revenue from Azure and other cloud services in fiscal 2025 rose 34% from the previous year to more than $75 billion.

For the fiscal second quarter, Microsoft said in its earnings release that it expects revenue in the range of $79.5 billion to $80.6 billion. The middle of the range was $80.05 billion, while analysts were expecting $79.95 billion, according to LSEG.

The company said it expects Azure’s constant currency growth to be 37% in the second fiscal quarter, in line with forecasts.

Investors have been listening closely to Microsoft’s comments on capital spending as the company works to build the infrastructure necessary to support demand for artificial intelligence. Capital expense in the first quarter was $34.9 billion, CFO Amy Hood said. He told investors in July that the company expected to spend $30 billion during the quarter on capital expenditures and assets acquired through leases.

The capital expenditure growth rate for fiscal 2026 will be above the rate in 2025, Hood said. He had previously said there would be a slowdown in growth.

Microsoft’s Productivity and Business Processes segment, home to Office productivity software and LinkedIn, generated $33 billion in revenue in the first quarter; this was above the $32.33 billion consensus among analysts polled by StreetAccount.

Its More Personal Computing unit, which includes Windows, search ads, devices and video games, reported revenue up 4% to $13.8 billion. This was above StreetAccount’s consensus of $12.83 billion.

Microsoft’s gain came hours after the company experienced an outage to its Azure and 365 services. Various websites and games were down for hours, and Microsoft said it expected to be restored by this evening.

Microsoft shares are up 28% this year as of Wednesday’s close, reaching a record the day before. Much of its AI momentum is attributed to its tight relationship with OpenAI.

On Tuesday, OpenAI announced that it had completed its restructuring, officially establishing Microsoft’s stake in the company. Under the new structure, OpenAI’s nonprofit will own a 26% stake in its for-profit arm, worth about $130 billion. Microsoft will own a 27% stake, valued at approximately $135 billion, and current and former employees and investors will own the remaining 47%.

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