The news
Microsoft earnings released on July 29, 2026, showed fiscal fourth-quarter revenue up 18% to $90.0 billion for the three months ended June 30. Azure and other cloud services revenue grew 43%, and Microsoft (MSFT) said Microsoft 365 Copilot passed 30 million paid seats.
Operating income rose 18% to $40.6 billion. Net income was $35.8 billion on a GAAP basis, up 31%, and $35.3 billion on a non-GAAP basis, up 22%. Diluted earnings per share were $4.81 and $4.74 on the same two bases. Microsoft Cloud revenue reached $59.3 billion, up 27%.
By segment, Intelligent Cloud revenue rose 32% to $39.3 billion and Productivity and Business Processes grew 14% to $37.8 billion. More Personal Computing fell 4% to $12.9 billion, with Windows OEM and devices revenue down 7% and Xbox content and services down 10%. For the full fiscal year, revenue rose 18% to $331.8 billion, and Chief Financial Officer Amy Hood said Azure passed $100 billion, up 41%.
Infrastructure spending kept climbing. Hood said capital expenditures, including finance leases, were $41 billion in the quarter, with roughly two-thirds going to short-lived assets, mainly CPUs and GPUs. The cash flow statement shows additions to property and equipment of $35.8 billion for the quarter, up from $17.1 billion a year earlier, and $115.9 billion for the fiscal year, up from $64.6 billion.
Commercial remaining performance obligation, or contracted revenue not yet recognized, rose 84% to $678 billion. Hood said it grew 25% excluding OpenAI and that roughly 30% will be recognized within 12 months. For the September quarter she guided to revenue of $89.85 billion to $90.95 billion and Azure growth of about 45% in constant currency, and said fiscal 2027 capital spending will grow.
The numbers
- Fiscal Q4 revenue
- $90.0 billion, up 18%
- Azure and other cloud services revenue growth
- 43%
- Microsoft 365 Copilot paid seats
- Over 30 million
- Commercial remaining performance obligation
- $678 billion, up 84%
- Q4 capex including finance leases (Amy Hood)
- $41 billion
- Q4 additions to property and equipment (cash flow statement)
- $35.8 billion
- Fiscal 2026 additions to property and equipment
- $115.9 billion
- Fiscal Q1 2027 Azure growth guidance
- About 45% in constant currency
Why CEOs should care
For buyers, capacity is the constraint. Hood said customer demand continues to exceed available supply. Teams planning large AI workloads on Azure should get capacity commitments in writing, confirm regions and GPU types, and keep a second provider qualified. Tight supply is not a setting in which to expect deep discounts on AI infrastructure.
For CFOs, the Copilot seat count is not a price benchmark. Directions on Microsoft, an independent analyst firm, reported that many customers receive 20% to 40% discounts off Microsoft 365 Copilot's $30 per user per month retail price, and that demand for the $99 per user per month Microsoft 365 E7 bundle has been solid. Renewal teams should benchmark against those discounts. CISOs should treat each Copilot expansion as a data-access project and review file permissions before new seats go live.
Boards should look closely at the backlog. Hood said commercial remaining performance obligation grew 25% excluding OpenAI, against 84% in total, so much of the year-over-year jump reflects commitments from one AI developer. Directors weighing their own AI suppliers should ask how concentrated those suppliers' customer bases are.
The bigger picture
The quarter followed a hard first half for Microsoft shares, which Reuters reported fell nearly 23% in the first six months of 2026. Hood also flagged an accounting change for fiscal 2027: extending the estimated useful lives of datacenters and office buildings from 15 to 25 years, which Directions on Microsoft said moves more future datacenter leases from finance to operating leases.
Hood said Microsoft's calendar 2026 investment plans were unchanged, but that the shift to operating leases adjusts its capex expectation to approximately $175 billion. Before the call, Reuters had cited a $190 billion spending projection from Microsoft for 2026.
What happened next
On August 11, 2026, Microsoft AI released MAI-Code-1.1-Flash, an in-house coding model for GitHub Copilot and VS Code that it said is priced at one quarter of the previous version. On September 25, 2026, Microsoft introduced a redesigned Copilot and said agentic work, including its new Autopilot agent, would be billed by usage, while chat and Office features fall under a fixed per-user license.
Microsoft's fiscal first-quarter results, covering the three months ending September 30, 2026, will show whether Azure reached the roughly 45% growth Hood guided and whether capex topped the more than $50 billion she forecast for the quarter.
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