Microsoft Revenue Rises 19% on Cloud Growth

Microsoft said on the 28th that revenue for its fiscal first quarter of 2027, covering July through September, rose 19% year over year to $92.279 billion. That exceeded the $90.69 billion expected by Wall Street, according to the London Stock Exchange Group (LSEG). Operating income increased 21% to $45.915 billion, and net income rose 32% to $36.629 billion. Earnings per share (EPS) came to $4.92, above the $4.73 estimate. Adjusted EPS, excluding a $207 million gain in the value of its OpenAI investment, was $4.89.

Cloud growth reflected expanding AI demand. Total cloud revenue rose 30% to $63.9 billion, while revenue from Azure, Microsoft’s core cloud platform, jumped 48% to $33.17 billion, topping Visible Alpha’s $32.84 billion estimate. Analysts said comparisons with Amazon Web Services (AWS) and Google Cloud have become clearer since Microsoft began reporting Azure revenue in dollar terms as well as growth rates last month. Commercial remaining performance obligations (RPO), contracts expected to be recognized as future revenue, grew 73% to $677 billion.

Revenue in the agent and infrastructure segment increased 25% to $76.8 billion. Microsoft 365 (M365) cloud revenue rose 17% for both business and consumer customers. By contrast, the devices and consumer segment fell 3% to $15.5 billion. Search and advertising revenue grew 12%, while Xbox content and services declined 2% and Windows operating system (OEM) and devices revenue fell 22%.

Capital expenditure (CapEx) was $45.2 billion, up from $34.9 billion a year earlier but below the company’s $50 billion forecast. Jonathan Nielsen, Microsoft’s vice president of investor relations, said spending came in below expectations because outside suppliers delivered equipment later than expected; the company’s investment plans had not changed. Free cash flow (FCF) was $18.6 billion, more than twice the market estimate of $8.54 billion. Reuters said that contrasted with Alphabet and Meta, which face cash-flow pressure from large AI investments.

Jesse Cohen, senior analyst at Investing.com, said Microsoft provided a counterexample as results from Meta and Alphabet revived concerns about the burden of AI investment. He said cloud demand exceeded supply, the company had a large backlog of orders, and returns on AI investment were beginning to appear in revenue and profit. Microsoft Chairman and CEO Satya Nadella said the company was giving customers capability, choice, control and cost efficiency, and that innovation was driving wider adoption and tangible results across industries.

Microsoft said on the 28th that revenue for its fiscal first quarter of 2027, covering July through September, rose 19% year over year to $92.279 billion. That exceeded the $90.69 billion expected by Wall Street, according to the London Stock Exchange Group (LSEG). Operating income increased 21% to $45.915 billion, and net income rose 32% to $36.629 billion. Earnings per share (EPS) came to $4.92, above the $4.73 estimate. Adjusted EPS, excluding a $207 million gain in the value of its OpenAI investment, was $4.89.

Cloud growth reflected expanding AI demand. Total cloud revenue rose 30% to $63.9 billion, while revenue from Azure, Microsoft’s core cloud platform, jumped 48% to $33.17 billion, topping Visible Alpha’s $32.84 billion estimate. Analysts said comparisons with Amazon Web Services (AWS) and Google Cloud have become clearer since Microsoft began reporting Azure revenue in dollar terms as well as growth rates last month. Commercial remaining performance obligations (RPO), contracts expected to be recognized as future revenue, grew 73% to $677 billion.

Revenue in the agent and infrastructure segment increased 25% to $76.8 billion. Microsoft 365 (M365) cloud revenue rose 17% for both business and consumer customers. By contrast, the devices and consumer segment fell 3% to $15.5 billion. Search and advertising revenue grew 12%, while Xbox content and services declined 2% and Windows operating system (OEM) and devices revenue fell 22%.

Capital expenditure (CapEx) was $45.2 billion, up from $34.9 billion a year earlier but below the company’s $50 billion forecast. Jonathan Nielsen, Microsoft’s vice president of investor relations, said spending came in below expectations because outside suppliers delivered equipment later than expected; the company’s investment plans had not changed. Free cash flow (FCF) was $18.6 billion, more than twice the market estimate of $8.54 billion. Reuters said that contrasted with Alphabet and Meta, which face cash-flow pressure from large AI investments.

Jesse Cohen, senior analyst at Investing.com, said Microsoft provided a counterexample as results from Meta and Alphabet revived concerns about the burden of AI investment. He said cloud demand exceeded supply, the company had a large backlog of orders, and returns on AI investment were beginning to appear in revenue and profit. Microsoft Chairman and CEO Satya Nadella said the company was giving customers capability, choice, control and cost efficiency, and that innovation was driving wider adoption and tangible results across industries.