July 30, 2026, (Inside AI) — Microsoft closed its fiscal year with a commanding fourth quarter, reporting $90.0 billion in revenue, an 18% jump from the same period last year. The company’s cloud division remained the engine of growth, while a $3.2 billion gain from its investment in Anthropic and lower voluntary retirement costs added an unexpected $0.27 bump to diluted earnings per share.
Net income surged 31% on a GAAP basis to $35.8 billion, and operating income rose 18% to $40.6 billion. Microsoft Cloud revenue hit $59.3 billion, up 27%, while the commercial remaining performance obligation ballooned 84% to $678 billion, signaling a massive pipeline of future cloud contracts.
These numbers arrive as the tech giant navigates a complex AI investment landscape. Non-GAAP results strip out the impact from OpenAI investments, which added $480 million to net income this quarter. A year ago, those same investments dragged down net income by $1.575 billion.
“We are advancing the frontier on the cost-to-outcome curve, ensuring every customer can turn tokens into business results,” said Satya Nadella, chairman and chief executive officer of Microsoft. “This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation.”
Azure and other cloud services revenue jumped 43%, cementing its role as the company’s growth spearhead. This surge aligns with industry-wide AI infrastructure spending, but Microsoft’s ability to monetize AI through Copilot seats sets it apart. The 30 million paid Copilot seats represent a tangible return on AI investments, a metric competitors are still chasing.
“We delivered a strong quarter to close out the fiscal year, highlighted by Microsoft Cloud revenue of $59.3 billion, up 27% year-over-year,” said Amy Hood, executive vice president and chief financial officer of Microsoft.
Anthropic Gain Masks XBOX and Windows Weakness
The $3.2 billion Anthropic gain and lower retirement costs offset severance expenses and impairment charges in XBOX. Without these discrete items, Microsoft still exceeded internal expectations across revenue, operating income, and earnings per share, but the personal computing segment remains a drag. More Personal Computing revenue fell 4% to $12.9 billion, with XBOX content and services down 10% and Windows OEM and Devices revenue declining 7%.
Microsoft returned $10.2 billion to shareholders through dividends and buybacks in the quarter. For the full fiscal year, revenue reached $331.8 billion, up 18%, and operating income hit $155.2 billion, a 21% increase.
The company’s AI strategy is increasingly tied to its cloud infrastructure. Microsoft’s commercial remaining performance obligation of $678 billion suggests enterprises are locking into long-term Azure commitments, likely driven by AI workloads. Research from Stanford’s AI Index Report shows cloud spending on AI training and inference has grown over 40% annually, a trend Microsoft is capitalizing on.
OpenAI Investment Swings and Non-GAAP Clarity
The non-GAAP adjustments highlight the volatility of Microsoft’s AI bets. In fiscal 2025, OpenAI losses cut net income by $3.62 billion. This year, gains added $4.96 billion. Microsoft’s decision to break out these impacts reflects a push for transparency as AI investments become material to earnings. A recent SEC guidance on non-GAAP measures encourages such clarity, but the swings make it harder to assess core operational performance.
Looking ahead, Microsoft’s forward guidance will be closely watched. The company faces intense competition in AI from Google Cloud and Amazon Web Services, both ramping up their own AI services. The 43% Azure growth is impressive but may face tougher comparisons as the base grows.
Microsoft’s earnings call at 2:30 p.m. Pacific time today will likely address how the company plans to sustain AI momentum while managing costs. The webcast replay is available through July 29, 2027, at Microsoft’s investor relations site.
