Microsoft's FY26 Q4 Earnings Hit $90 Billion as AI Growth Accelerates

Microsoft reported $90 billion in revenue for the fourth quarter of fiscal year 2026, driven by continued growth across its cloud and artificial intelligence businesses.

According to Microsoft’s latest financial results, quarterly revenue increased 18% year-over-year. Operating income also rose 18% to $40.6 billion, while net income jumped 31% to $35.8 billion.

The company credited strong demand for cloud infrastructure, AI services, and productivity tools for another record quarter.

Azure Becomes a $100 Billion Business

Microsoft Cloud revenue reached $59.3 billion during the quarter, representing a 27% annual increase. Intelligent Cloud revenue climbed 32% to $39.3 billion.

Azure and other cloud services revenue increased 43% during the quarter. For the full fiscal year, Azure revenue grew 41% and exceeded $100 billion for the first time.

Microsoft Cloud generated more than $214 billion across fiscal year 2026, reinforcing its position as the company’s primary growth engine.

The company also reported strong demand for its enterprise data products. Azure Database for PostgreSQL revenue increased 55%, while Microsoft Fabric surpassed 40,000 paid customers, up more than 60%.

Microsoft Foundry has now reached 100,000 customers, and its revenue has more than doubled compared with the previous year.

Microsoft 365 Copilot Passes 30 Million Paid Seats

Microsoft 365 Copilot now has more than 30 million paid seats. Net seat additions more than doubled compared with the previous quarter.

Large enterprises appear to be expanding their Copilot deployments rapidly. The number of customers using more than 50,000 Copilot seats increased more than sevenfold year-over-year.

LinkedIn also recorded stronger adoption of its AI products. Recruiters at more than 20,000 companies now use LinkedIn’s AI tools, while the number of paid AI product seats increased 140% quarter-over-quarter.

GitHub Copilot Reaches 50 Million Users

GitHub Copilot has grown to 50 million users, while the broader GitHub platform now serves 225 million users.

GitHub Copilot revenue growth exceeded 60% quarter-over-quarter following its move to usage-based billing.

The increase suggests that Microsoft’s developer AI business continues to benefit from both user growth and higher usage among existing customers.

Windows and XBOX Revenue Decline

Microsoft’s consumer businesses produced mixed results during the quarter.

Windows OEM and Devices revenue declined 7%, while Bing and advertising revenue increased 10%.

XBOX content and services revenue fell 10%. Microsoft is also planning an XBOX price increase, although higher console prices may not fully address the company’s wider hardware and supply challenges.

The declines contrast sharply with the rapid expansion of Microsoft’s cloud and AI divisions.

Microsoft Spends $41 Billion on AI Infrastructure

Microsoft spent more than $41 billion on capital expenditures during the quarter as it continued expanding the infrastructure required to support Azure and AI services.

Around two-thirds of the spending went toward short-lived assets, including CPUs and GPUs. Microsoft’s calendar-year 2026 capital expenditures could reach approximately $175 billion, with spending expected to rise again during fiscal year 2027.

The company opened 31 data centers across five continents during the quarter and 88 throughout the full fiscal year.

Microsoft also expects Cobalt 200 racks to operate in more than 25 data centers by the end of July. The continued expansion shows that the company remains focused on increasing capacity despite the exceptionally high cost of building and operating AI infrastructure.

Via Neowin