Microsoft Corp. reported fiscal fourth-quarter earnings on Wednesday showing net income jumped 31% to 35.8 billion dollars, driven by surging demand for its cloud and artificial intelligence services. Revenue reached 90 billion dollars for the quarter ended June 30, up 18% from a year earlier and ahead of Wall Street expectations.
The standout figure came from Azure. Cloud services revenue grew 43% during the quarter, pushing Azure’s annual revenue past the 100 billion dollar mark for the first time in the company’s history. Microsoft Cloud, which combines Azure with other commercial cloud offerings, generated total revenue of 49.3 billion dollars for the quarter, up 27% year over year.
Microsoft’s commercial remaining performance obligation, a measure of contracted future revenue not yet recognized, surged 84% to roughly 368 billion dollars, a figure executives pointed to as evidence of strong ongoing demand for the company’s AI and cloud infrastructure well into the future. Operating income for the quarter rose 18% to 40.6 billion dollars.
Microsoft 365 Copilot, the company’s AI assistant embedded across its productivity software, reached more than 30 million paid seats, a milestone executives cited as proof that enterprise customers are increasingly willing to pay for AI-powered tools built into everyday office software. The company also recorded a sizable gain tied to its investment in AI lab Anthropic, which contributed to the quarter’s bottom line.
Chief Executive Satya Nadella said Microsoft is “advancing the frontier on the cost-to-outcome curve, ensuring every customer can turn tokens into business results,” language the company has increasingly used to describe how it is trying to prove that AI spending translates into measurable returns for the businesses that rely on its cloud services.
For the full 2026 fiscal year, Microsoft generated 331.8 billion dollars in total revenue and 133.7 billion dollars in net income, capping a year in which the company poured record sums into data centers and AI infrastructure to keep pace with demand. Capital expenditures hit a record 41 billion dollars in the quarter alone, and free cash flow fell 23% as the company continued its aggressive buildout.
The results add Microsoft to the list of major technology companies whose fortunes are increasingly tied to the AI infrastructure race, alongside rivals such as Amazon and Google parent Alphabet, both of which are also ramping up cloud and AI capital spending. Investors have been watching closely this earnings season for evidence that the enormous sums being poured into AI data centers and chips are beginning to pay off in higher revenue rather than simply higher costs.
Microsoft’s stock has benefited from the company’s ability to show that its AI investments are translating directly into Azure growth and Copilot adoption, giving it something of a buffer against the broader market anxiety that AI spending across the technology sector may be outpacing near-term returns.
Sources: CNBC, Microsoft Source, Fortune