The numbers came in, and they were hard to argue with.
Microsoft reported fiscal-year 2026 revenue of $331.8 billion and net income of $133.7 billion, up 31% over the prior year. Diluted earnings per share rose 32% to $17.95. The headline inside those figures: Azure, the company's core cloud platform, crossed $100 billion in annual revenue for the first time, rising 33% from last year's $75 billion.
For the fourth quarter alone, revenue reached $90 billion, up 18% year-over-year, beating analyst estimates of $87.7 billion. Net income for the quarter surged 31% to $35.8 billion. Diluted EPS hit $4.81, up 32%.
Microsoft Cloud — Azure plus adjacent cloud services — generated $59.3 billion in the quarter, a 27% increase. The commercial remaining performance obligations, a forward-looking gauge of signed but not-yet-recognized customer contracts, stood at $678 billion, up 84%. That backlog is the kind of visibility that makes capital allocators sleep well.
CEO Satya Nadella attributed the Azure acceleration to customer demand for AI workloads, and said Microsoft's 365 Copilot service reached over 30 million paid seats. The AI infrastructure bet, which has drawn skepticism from investors worried about returns on massive capital expenditure, is beginning to show up in the income statement rather than just the balance sheet.
Shares rose more than 8% in after-hours trading on Wednesday, even as the broader market sold off sharply during the regular session. The Dow Jones Industrial Average fell more than 1,100 points after the Federal Reserve held interest rates steady, and the Nasdaq 100 dropped more than 2%. Tech stocks have faced pressure in recent sessions over fears that AI-related capital spending will outpace monetization.
Microsoft's results complicate that narrative. The $2.9 trillion company's net income was aided in part by a $3.2 billion gain from its investment in Anthropic and nearly $5 billion in gains from its investment in OpenAI during the fiscal year. Those gains were partially offset by severance expenses and impairment charges in the Xbox video game business.
Stripped of the investment gains, the operating picture still reflects a business generating durable, compounding cash flows from enterprise customers who are locking in multi-year AI and cloud commitments.
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CEO Times take: The market spent the week repricing AI optimism downward. Microsoft just handed it a data point that cuts the other way. A $678 billion backlog does not lie — enterprises are signing contracts, not just running pilots. Azure's ascent to nine-figure annual revenue in a single fiscal year is precisely the kind of private-sector execution that thrives when Washington stays out of the way. The Fed's rate pause may have rattled equities Wednesday, but the real story is simpler: free enterprise, disciplined capital deployment, and a product customers are willing to pay for at scale. The market has already voted — eight percent after hours says it all.
