Microsoft's fiscal fourth-quarter revenue reached $90.01 billion, ahead of the $87.62 billion analysts expected, and the company said Azure revenue exceeded $100 billion across the 2026 fiscal year for the first time. Capital expenditures and finance leases jumped 69% to $41 billion in the quarter while free cash flow fell 23%. The stock rose 3% in extended trading.
Microsoft posted revenue of $90.01 billion in the fiscal fourth quarter, which ended on June 30, ahead of the $87.62 billion analysts polled by LSEG expected and up about 18% year over year.
Adjusted earnings reached $4.74 per share against the $4.24 LSEG consensus. Net income rose to $35.77 billion, or $4.81 per share, from $27.23 billion, or $3.65 per share, a year earlier. Microsoft cited a $3.2 billion gain from its investment in AI lab Anthropic and lower-than-expected costs tied to its first-ever voluntary retirement program, while its Xbox gaming business received an impairment charge.
Azure growth accelerates to 43%
The Intelligent Cloud segment that houses Azure produced $39.31 billion in revenue, up 31.6% year over year and more than the $38.16 billion StreetAccount consensus. Azure growth itself accelerated to 43%, compared with 40% in the prior quarter and the 40% analysts had modelled.
Microsoft does not put a dollar figure on Azure's revenue. At its current size the business trails Amazon Web Services while remaining larger than Alphabet's Google Cloud, and paid seats for the Microsoft 365 Copilot assistant passed 30 million.
Capital spending climbs as free cash flow shrinks
Meanwhile, capital expenditures and finance leases for the quarter jumped 69% to $41 billion, and free cash flow fell 23% to $19.64 billion. Microsoft said in April that its capital expenditure for 2026 would come in at $190 billion, with most of the spending falling in the back half of the year.
Commercial remaining performance obligations, a measure of unearned and unrecognized revenue, increased 8% to $678 billion from the previous quarter. Microsoft said commitments from clients other than AI model developers drove that sequential growth.
Hood points staff to Azure and Copilot
Chief financial officer Amy Hood recapped the results for employees afterward, telling them Microsoft Cloud revenue was $59.3 billion in Q4 and $214 billion for the full fiscal year, growing 27% across both periods. Commercial bookings grew 18% excluding OpenAI, she wrote.
Hood wrote in the memo to employees: "We begin this new year with clear priorities, strong customer demand, and significant opportunity ahead".
Microsoft stock has given up 19% in 2026
The stock edged up 3% in extended trading on Wednesday. As of Wednesday's close, however, shares had given up 19% so far in 2026 while the S&P 500 index gained about 7%, as investors squeezed longstanding software stocks on fears of disruption from generative AI models.
Sources: CNBC, Financial Times, Business Insider
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