Azure and other cloud services grew 43% year over year in the quarter ended June 30, 2026, up from 40% a quarter earlier. Capital expenditures reached approximately $41 billion in the quarter, and Microsoft Cloud gross margin fell to 65%.
Microsoft's cloud business accelerated in the quarter ended June 30, 2026, with Azure and other cloud services growing 43% year over year, up from 40% the quarter before. Microsoft reported the results on July 29, 2026.
Azure tops $100 billion for the year
Full-year Azure revenue topped $100 billion for the first time, up 41% year over year. Total company revenue for the fourth quarter reached $90 billion, an 18% increase.
Microsoft Cloud, the broader bucket that includes Azure and commercial cloud products, brought in $59.3 billion, up 27%. GAAP net income came in at $35.8 billion, a 31% jump from the prior year.
Spending on AI infrastructure weighs on margins
Capital expenditures in the fourth quarter hit approximately $41 billion, and for the full fiscal year additions to property and equipment reached $115.9 billion, up 80% year over year.
Microsoft also added 31 data centers during the fourth quarter and 88 across fiscal 2026. Microsoft Cloud gross margin fell to 65% in the fourth quarter, down from 68% in the prior quarter, as the company poured money into AI infrastructure.
Backlog and Copilot seats point to demand
Commercial remaining performance obligations rose to $678 billion, up 84% year over year, and Microsoft 365 Copilot passed 30 million paid seats by the end of the quarter.
Microsoft's earlier quarters featured capacity constraints, meaning it had more customer demand than infrastructure to serve it. The fourth-quarter results suggest that earlier spending is now converting into accelerated revenue as new capacity goes live.
Microsoft projects Azure growth of 45% in constant currency for the first quarter of fiscal 2027.
Source: Crypto Briefing
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