Microsoft Q4 Earnings Call Highlights

Microsoft NASDAQ: MSFT closed fiscal 2026 with record revenue and continued growth in cloud and artificial intelligence services, while outlining plans for further infrastructure investment and forecasting double-digit revenue and operating-income growth in fiscal 2027. For the fiscal fourth quarter, Microsoft reported revenue of $90 billion, up 18% year over year, or 17% in constant currency. Operating income rose 18%, while earnings per share reached $4.74, up 23% after adjusting for the impact of the company’s OpenAI investment. Chief Financial Officer Amy Hood said the quarter included a $3.2 billion gain from Microsoft’s investment in Anthropic, as well as lower-than-expected expenses related to its voluntary retirement program. Those benefits were partly offset by Xbox severance and impairment charges.

For the full fiscal year, revenue surpassed $331 billion, up 18%, and operating income exceeded $155 billion, up 21%. Microsoft Cloud revenue exceeded $214 billion for the year, with nearly 90% coming from customers outside frontier-model companies, Hood said.

Intelligent Cloud revenue rose 32% to $39.3 billion in the quarter. Azure and other cloud services revenue increased 43%, with Hood saying demand continued to exceed available capacity. She attributed the stronger-than-expected Azure results partly to efficiency improvements across Microsoft’s CPU and GPU fleet and process changes that enabled capacity to be delivered earlier. Chief Executive Officer Satya Nadella said Microsoft added 31 data centers across five continents during the quarter, bringing the year’s total additions to 88. The company added another gigawatt of capacity and remains on track to roughly double its overall capacity in two years, he said. Microsoft also reduced dock-to-live times for new GPUs in its largest regions by nearly 50% over the past fiscal year.

Capital expenditures totaled $41 billion in the quarter, including higher component prices. About two-thirds of the spending was directed toward short-lived assets, primarily CPUs and GPUs. Hood said cash paid for property and equipment was $35.8 billion, while free cash flow was $19.6 billion. Looking ahead, Microsoft expects fiscal first-quarter Azure revenue growth of about 45% in constant currency. Hood said the company remains capacity constrained despite its strong fourth-quarter execution and expects first-half Azure growth to accelerate.

Microsoft continued to report expanding adoption of its AI offerings. Nadella said Microsoft 365 Copilot surpassed 30 million paid seats, with net paid-seat additions more than doubling sequentially. The company said the number of customers with more than 50,000 Copilot seats increased more than sevenfold from a year earlier. Nadella highlighted sev...