MSFT Q4 2026: Azure Grows 43%, Revenue Hits $90B as Net Income Jumps 31%

Microsoft (NASDAQ: MSFT) closed its fiscal year with fourth-quarter revenue of $90.0 billion, up 18% year over year, as Azure cloud-computing revenue grew 43%, the fastest quarterly pace since early 2022. Adjusted EPS of $4.74 beat the FactSet consensus estimate of $4.33 by 9.5%, while GAAP EPS came in at $4.81, up 31.8% from $3.65 in the prior-year period.

Q4 2026 Results

• Revenue: $90.0 billion, up 18% year over year (up 17% in constant currency)
• GAAP operating income: $40.6 billion, up 18% year over year, implying a 45.1% operating margin
• GAAP net income: $35.8 billion, up 31% year over year; non-GAAP net income of $35.3 billion, up 22%
• GAAP EPS: $4.81, up 31.8% from $3.65; adjusted EPS $4.74, up 22.8% from $3.86
• Microsoft Cloud revenue: $59.3 billion, up 27% year over year
• Commercial remaining performance obligation: up 84% to $678 billion

What Drove the Results

Adjusted EPS of $4.74 beat the $4.33 consensus by $0.41, a 9.5% positive surprise. Revenue of $90.0 billion exceeded analyst expectations of $87.62 billion. The Intelligent Cloud segment, which houses Azure, posted revenue of $39.3 billion, up 32% year over year, with Azure and other cloud services revenue specifically up 43%.

GAAP net income of $35.8 billion exceeded non-GAAP net income of $35.3 billion, with the divergence driven by a net gain from investments in OpenAI. In Q4, OpenAI-related investments contributed a net increase of $480 million to GAAP net income and $0.07 to GAAP diluted EPS, which Microsoft excludes from its non-GAAP presentation. The company also recorded a $3.2 billion gain from its investment in Anthropic during the quarter, and disclosed lower-than-expected expenses from its Voluntary Retirement Program, partially offset by severance expense and impairment charges in Xbox.

The Productivity and Business Processes segment generated $37.8 billion in revenue, up 14%, with Microsoft 365 Consumer cloud revenue rising 24% and LinkedIn revenue up 12%. The More Personal Computing segment posted $12.9 billion in revenue, down 4%, with Windows OEM and Devices revenue declining 7% and Xbox content and services revenue falling 10%. For the full fiscal year ended June 30, 2026, Microsoft reported revenue of $331.8 billion, up 18%, and GAAP diluted EPS of $17.95, up 32%. CEO Satya Nadella noted that Azure revenue surpassed $100 billion for the first time on an annual basis, and that Microsoft 365 Copilot reached over 30 million paid seats.

Wall Street View

The commercial remaining performance obligation of $678 billion, up 84% year over year, is a structural demand signal pointing to contracted future revenue not yet recognized. Microsoft did not disclose specific forward guidance figures in its earnings release, noting only that further details would be shared during its earnings conference call and webcast held the same day.

Investor Takeaway

The combination of 43% Azure growth, a $678 billion commercial backlog, and 30 million paid Microsoft 365 Copilot seats positions the company's AI monetization as increasingly concrete rather than aspirational. The GAAP-to-non-GAAP gap narrowed considerably this quarter, and the underlying non-GAAP EPS beat of 9.5% reflects operational execution above and beyond the one-time Anthropic gain, which is a more durable signal for investors evaluating the quality of the quarter.