Microsoft Azure exceeds $100 billion in annual revenue for the first time
Microsoft has closed its fiscal year 2026 with a historic milestone: its Azure cloud platform has exceeded $100 billion in annual revenue for the first time. The figure, announced on 29 July along with the fourth-quarter results (closed on 30 June), confirms that the Redmond company’s multibillion-dollar bet on artificial intelligence is beginning to translate into real business, and sent its shares up more than 8% in after-hours trading.
A record quarter for the cloud
In the fiscal fourth quarter, the Azure cloud computing division and other cloud services grew 43% year over year, beating the 39.98% expected by the analyst consensus compiled by Visible Alpha. Microsoft Cloud as a whole, which includes Azure, Microsoft 365 and other enterprise offerings, reached $59.3 billion in revenue in the quarter, 27% more than in the same period of the previous year.
The company’s overall results were also solid: total revenue grew 18% to $90 billion, net profit rose 31% to $35.8 billion and diluted earnings per share were $4.81. The company returned $10.2 billion to shareholders through dividends and share buybacks in the quarter.
AI as the engine, with one eye on Google
Azure’s growth comes at a time of maximum competitive tension. Just a week ago, Google Cloud surprised the market with 82% growth in its cloud revenue, a pace that led some analysts to wonder whether the search giant could snatch second place in the market from Microsoft, behind leader Amazon Web Services.
“It seemed like Google was taking market share from everyone and could reach Azure’s share if it kept that trajectory,” explains Dave Wagner, portfolio manager at Aptus Capital Advisors. “But what Azure is showing is that it is still in the race.”
In the call with analysts, CEO Satya Nadella detailed the strategy behind these numbers: Microsoft, which for years relied on OpenAI’s models to power products such as Copilot, now designs its own models and its own chips, achieving efficiency gains of up to 40%.
“We are advancing at the frontier of the cost-to-outcome curve, ensuring that every customer can turn tokens into business outcomes,” Nadella said. The company advocates an enterprise architecture in which Microsoft and its customers can freely choose which AI technologies to use according to their cost and performance needs. Microsoft 365 Copilot, its AI assistant for office software, has already reached 30 million paid seats.
AI spending moderates (on paper)
One of the figures that most reassured investors was capital expenditure. Microsoft expects about $50 billion in capex for the first quarter of fiscal year 2027, below the $56 billion analysts expected, and about $175 billion for calendar year 2026 as a whole, below its own previous estimate of $190 billion.
However, part of this moderation is accounting: the company has extended the depreciation period of its data-centre lease contracts from 15 to 25 years, which reduces reported capital expenditure without altering its real investment plans. Microsoft insists that its spending level is unchanged and that it will continue generating cash: in the quarter, free cash flow was $19.6 billion, well above the $13.44 billion expected.
Capital expenditure in the April-June quarter was $41 billion, 70% more than the previous year, within a wave of big-tech investments that already exceeds $700 billion and has put investors on alert over the risk of overcapacity.
A breather for the sector
Microsoft’s results arrive in a context of Wall Street nervousness over the profitability of artificial intelligence. Redmond’s figures offer some relief: they show that the huge investments in data centres and AI models can turn into growing revenue, and that competition in the cloud remains an open game between Amazon, Microsoft and Google.
With an Azure growth forecast of 45% in constant currency for the first quarter of 2027 —versus the 40.92% the market expected—, Microsoft sends a clear message: the AI era is not only not slowing down, but is becoming the main growth engine of the enterprise cloud.
