Microsoft (MSFT) Q4 earnings report 2026

Microsoft Shares rose 8% in extended trading Wednesday after the software maker reported strong fourth-quarter earnings and called for steady capital spending in 2026.

The company’s performance according to the LSEG consensus is as follows:

• Earnings per share: $4.74 corrected. This may not compare to the $4.24 adjustment. per share expected by LSEG
• Revenues: 90.01 billion dollars, while the expectation was 87.62 billion dollars

Microsoft’s revenue grew nearly 18 percent year-over-year in the quarter ending June 30. expression.

Net income of $35.77 billion, or $4.81 per share, increased from $27.23 billion, or $3.65 per share, in the same quarter a year ago. Microsoft stated that it earned $3.2 billion from its investment in artificial intelligence laboratory Anthropic and that the costs associated with its first voluntary retirement program were lower than expected. Meanwhile, its Xbox gaming business also took an impairment charge.

As of Wednesday’s close, shares of the software maker have lost 19% of their value so far in 2026, while the S&P 500 index has gained about 7%. Investors have squeezed long-standing software stocks this year, driven by fears of disruption to productive AI models.

Meanwhile, Deutsche Bank analysts who recommend buying Microsoft shares said in a note last week that Microsoft faces “some concentration risk” with its OpenAI relationship, particularly with the rise of open-source models. Microsoft said in January that about 45% of its remaining $625 billion in business performance obligations were tied to OpenAI.

When it comes to allocating computing capacity, CEO Satya Nadella is trying to balance the needs of the Azure cloud, research, and apps like the Microsoft 365 Copilot assistant. If researchers get more AI chips for model training, that means fewer will be available for cloud clients.

The company said business remaining performance liabilities, a measure of unearned revenue and unrecognized revenue, rose 8% from the previous quarter to $678 billion. Microsoft said the sequential growth was driven by commitments from customers other than AI model developers.

This quarter, capital expenditures and financial leases increased by 69% to $41 billion.

Microsoft’s finance chief Amy Hood reiterated 2026 capital spending plans. But he said it would increase the useful life of office and data center buildings from 15 years to 25 years. He said more data center leases in the future will appear as operating leases rather than financial leases. Hood said the regulation would lead to roughly $175 billion in capital expenditures and leases.

Hood said he sees further growth in capital spending for fiscal 2027, pointing to “demand signals across our portfolio.”

Free cash flow fell 23% to $19.64 billion. Hood said Microsoft expects to have positive free cash flow in fiscal 2027.

Microsoft’s forecast calls for a 16% increase in revenue between $89.85 and $90.95 in the fiscal first quarter. Analysts polled by LSEG were looking for $89.66 billion.

The Intelligent Cloud segment, which includes Azure, generated revenue of $39.31 billion, up 31.6% from the previous year and above the $38.16 billion consensus among analysts surveyed by StreetAccount.

Azure growth increased to 43%, or 43% at constant currency, compared to 40% in the previous quarter. Analysts surveyed by CNBC and StreetAccount were expecting Azure growth of 40% and 40.2% in constant currency.

Microsoft said Azure revenue surpassed $100 billion for the first time in fiscal 2026, up 41%. At this size, business roads Amazon While Web Services remains larger alphabet Google Cloud.

Hood forecast 45% Azure growth at constant currency in the fiscal first quarter, above StreetAccount’s consensus of 41.4%.

The Productivity and Business Processes segment, which includes Office, Dynamics and LinkedIn, had revenue of $37.85 billion, up 14.3% and above the StreetAccount consensus of $37.19 billion.

The company noted more than 30 million paid licenses for the Microsoft 365 Copilot work assistant. As of April, there were more than 20 million people.

Hundreds of enterprise customers have purchased millions of licenses for high-end E7 productivity software packages, Nadella said on a conference call with analysts. GitHub said its Copilot coding assistant now has 50 million users.

Microsoft’s More Personal Computing segment, which includes Bing, Surface, Windows and Xbox, contributed $12.85 billion in revenue, down 4.4% and beating StreetAccount’s forecast of $12.17 billion.

The company said device and Windows license sales to device manufacturers fell by 7%. Technology industry researcher Gartner estimated that PC shipments fell by 4.2%.

Xbox revenue decreased by 10%. Earlier this month, the unit’s CEO Asha Sharma announced the layoffs and said four studios would close.

In the fiscal fourth quarter, Microsoft introduced a cost-effective AI coding model, tapped LinkedIn executive Dan Shapero to take over its business social network, and slashed Xbox Game Pass subscription prices.

Executives are scheduled to discuss the results with analysts and offer guidance on a conference call starting at 5:30 p.m. ET.