The news
On September 2, 2026, Microsoft (MSFT) said AI is blurring its product lines and that it will cut its reporting segments from three to two starting in fiscal 2027. The new Microsoft reporting segments are Agents and Infra, and Devices and Consumer.
Microsoft disclosed the change in a Form 8-K furnished to the Securities and Exchange Commission (SEC) under Regulation FD, the rule requiring fair disclosure to investors. The same day it posted an investor presentation on its fiscal 2027 segments and investor metrics, with two years of restated results. The old segments, Productivity and Business Processes, Intelligent Cloud and More Personal Computing, had been in place since 2015, according to CNBC.
Agents and Infra will hold Azure, Microsoft 365 cloud, productivity and server licensing, a new Industry solutions line, and the consulting and support business, renamed Frontier and support services. Devices and Consumer will hold search and advertising, Xbox, and Windows OEM and devices. LinkedIn is split up: its talent and sales tools join Dynamics 365 in Industry solutions, while its marketing business and Premium subscriptions move into search and advertising.
Azure itself gets narrower. GitHub cloud, other developer cloud services and Security Copilot move to Microsoft 365 commercial cloud, and Healthcare and Life Sciences cloud moves to Industry solutions. Chairman and Chief Executive Satya Nadella wrote in the presentation that "Azure becomes more purely our consumption-based platform and infrastructure business." On the restated basis, Azure revenue was $101.9 billion in fiscal 2026, up from $72.6 billion a year earlier, and $29.42 billion in the June quarter, up 42%. CNBC reported that this is the first time Microsoft will report Azure revenue in dollars.
For fiscal 2026, restated, Agents and Infra had revenue of $268.1 billion and operating income of $136.4 billion, while Devices and Consumer had revenue of $63.7 billion and operating income of $18.9 billion. By our calculation, Agents and Infra accounted for about 81% of Microsoft's $331.8 billion in revenue and about 88% of its $155.2 billion in operating income.
Microsoft said it made only mechanical adjustments to the fiscal first-quarter outlook it gave on July 29, 2026, with no change to total revenue, cost of revenue or operating expenses. It now guides to Agents and Infra revenue of $75.15 billion to $75.75 billion, Devices and Consumer revenue of $14.7 billion to $15.2 billion, and Azure growth of 44% to 45% in constant currency. The July outlook had called for about 45% constant-currency growth in the broader Azure and other cloud services line.
The numbers
- Agents and Infra revenue, FY2026 (restated)
- $268.1 billion
- Agents and Infra operating income, FY2026 (restated)
- $136.4 billion
- Devices and Consumer revenue, FY2026 (restated)
- $63.7 billion
- Azure revenue, FY2026 (restated)
- $101.9 billion (FY2025: $72.6 billion)
- Azure revenue, June 2026 quarter (restated)
- $29.42 billion, up 42%
- FY2027 Q1 outlook, Agents and Infra revenue
- $75.15 billion to $75.75 billion
- FY2027 Q1 outlook, Azure growth
- 44% to 45% in constant currency
Why CEOs should care
For CFOs and investors who benchmark cloud spending, a dollar figure for Azure makes it easier to compare Microsoft with Amazon Web Services and Google Cloud, a benefit CNBC highlighted. But the new Azure is not the old Azure. Any model or peer comparison built on the Azure and other cloud services line needs rebuilding on the restated history. In the June quarter, restated Azure growth was 42%, against 43% on the old metric.
For technology buyers, segment labels do not change contracts, but they show where Microsoft is steering. Nadella wrote that the layers of Microsoft's stack reinforce each other rather than standing as separate opportunities, and the new segment puts Microsoft 365, GitHub, Security Copilot and Azure under one roof. If renewal proposals bundle Copilot, agent and Azure commitments, ask for line-item pricing so each piece can be compared with alternatives.
For boards and CISOs, Nadella wrote that the new structure mirrors how Microsoft runs the business and allocates resources. Ask finance teams to map existing Microsoft spend to the new categories so future earnings commentary on Azure, Microsoft 365 cloud and Industry solutions can be read against your own contracts. Security leaders should note that Security Copilot revenue now sits in Microsoft 365 commercial cloud, next to the productivity suite, rather than in Azure.
The bigger picture
MediaPost described the change as Microsoft's first major segment reorganization since 2015, aimed at showing investors the economics of AI. The stakes are high: the July outlook, repeated in the presentation, called for fiscal first-quarter capital expenditures of more than $50 billion, including the impact of a useful-life update.
The consumer side also gets a single advertising line. Nadella wrote that combining the ad businesses better reflects their shared economics across search, browsing, content discovery and transactions. Restated, search and advertising revenue was $24.8 billion in fiscal 2026.
What happened next
Microsoft said it will report fiscal first-quarter 2027 results in the new structure. That report will be the first live test of the restated baselines, showing Azure revenue in dollars for a new quarter and whether Agents and Infra lands in the $75.15 billion to $75.75 billion range.
What to watch: whether Azure growth meets the 44% to 45% constant-currency outlook on the narrower definition, and how Microsoft 365 commercial cloud, which now includes GitHub cloud and Security Copilot, tracks against its new guidance of about 17% constant-currency growth.
