Microsoft shares rose in extended trading on Wednesday after the software maker disclosed strong fiscal fourth-quarter revenue. The stock edged up 3% in extended trading.
Here’s how the company performed relative to LSEG consensus:
- Earnings per share: $4.74 adjusted. This exceeded LSEG’s expectation of $4.24 adjusted per share.
- Revenue: $90.01 billion vs. $87.62 billion expected.
Microsoft’s revenue grew approximately 18% year-over-year in the quarter, which ended June 30, according to a statement.
Net income of $35.77 billion, or $4.81 per share, increased from $27.23 billion, or $3.65 per share, in the same quarter a year ago. Microsoft attributed gains to a $3.2 billion investment in AI lab Anthropic and cost savings from its first voluntary retirement program. Meanwhile, its Xbox gaming business received an impairment charge.
As of Wednesday’s close, Microsoft’s shares had declined 19% in 2026, while the S&P 500 index gained roughly 7%. Investors have scaled back holdings in long-standing software stocks this year amid concerns about disruption from generative AI models.
Microsoft faces “some concentration risk” tied to its OpenAI partnership, particularly as open-source models gain traction, Deutsche Bank analysts noted. The firm recommends buying Microsoft stock. Microsoft revealed in January that approximately 45% of its $625 billion commercial remaining performance obligations were tied to OpenAI.
CEO Satya Nadella has navigated competing priorities: allocating computing capacity to Azure, research, and AI-driven applications like Microsoft 365 Copilot. Increased AI chip usage by researchers could reduce availability for cloud clients.
Commercial remaining performance obligations rose 8% to $678 billion in the quarter. Non-AI clients drove sequential growth, Microsoft stated.
Capital expenditures and finance leases totaled $41 billion, reflecting a 69% increase. Free cash flow declined 23% to $19.64 billion.
Microsoft’s Intelligent Cloud segment, powered by Azure, reported $39.31 billion in revenue—up 31.6% year-over-year—surpassing analyst expectations of $38.16 billion.
Azure growth accelerated to 43% at constant currency, compared to 40% in the prior quarter. Analysts polled by CNBC and StreetAccount had projected 40% and 40.2% growth at constant currency.
Microsoft noted Azure revenue for FY 2026 exceeded $100 billion—up 41%—making it second only to Amazon Web Services while outpacing Alphabet’s Google Cloud.
The Productivity and Business Processes segment (Office, Dynamics, LinkedIn) delivered $37.85 billion in revenue, up 14.3% year-over-year and above the $37.19 billion StreetAccount consensus.
Microsoft highlighted over 30 million paid seats for Microsoft 365 Copilot, up from 20 million in July.
The More Personal Computing segment (Bing, Surface, Windows, Xbox) contributed $12.85 billion in revenue, down 4.4% and above the $12.17 billion StreetAccount consensus.
Device and Windows license sales to manufacturers fell 7%. Gartner estimated PC shipments dropped 4.2% in the period.
Xbox content and services revenue declined 10%. Xbox CEO Asha Sharma announced job cuts and plans to spin off four studios earlier this month.
In the quarter, Microsoft launched a cost-efficient AI coding model, named LinkedIn executive Dan Shapero as head of the business social network, and reduced Xbox Game Pass subscription prices.
Executives will discuss results and issue guidance on a conference call starting at 5:30 p.m. ET.
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