Microsoft FY26 Q1 Earnings Out; Revenue Up By 18% to $77.7 Billion

Microsoft started fiscal year 2026 with strong first-quarter results. According to the latest earnings report, revenue stands at $77.7 billion, up 18% from last year. Operating income bumped up by 24% to $38 billion.

GAAP net income stands at $27.7 billion, up 12%. On a non-GAAP basis, net income hit $30.8 billion, a 22% increase. Diluted earnings per share climbed 23% to $4.13.

“Our planet-scale cloud and AI factory, together with Copilots across high-value domains, is driving broad diffusion and real-world impact,” said Satya Nadella, chairman and CEO. “It’s why we continue to increase our investments in AI across both capital and talent to meet the massive opportunity ahead.”

Microsoft Cloud revenue led the growth. Revenue from Cloud stands at $49.1 billion, up 26%, with commercial remaining performance obligations jumping 51% to $392 billion. Intelligent Cloud revenue is up by 28% to $30.9 billion.

Azure and other cloud services have also helped Microsoft, as they saw an increase of 40%. Productivity and Business Processes revenue rose 17% to $33 billion. Microsoft 365 Commercial climbed 17%, Microsoft 365 Consumer up 26%, LinkedIn up 10%, and Dynamics 365 up 18%.

More Personal Computing revenue was $13.8 billion, up 4%. Windows OEM and Devices grew 6%. Xbox content and services were flat at 1%, and Search and News Advertising rose 16%. Microsoft returned $10.7 billion to shareholders through dividends and share buybacks.

Investments in OpenAI have impacted earnings. The company reported $3.1 billion in losses for the quarter, reducing GAAP net income and EPS by $3.1 billion and $0.41, respectively.

“We delivered a strong start to the fiscal year, exceeding expectations across revenue, operating income, and earnings per share,” said Amy Hood, executive VP and CFO. “Continued strength in the Microsoft Cloud reflects the growing customer demand for our differentiated platform.”

For now, Cloud and AI are the key areas, with Azure and Microsoft 365 are leading growth. Overall, it’s a great start for the FY26.