Microsoft's AI business now runs at a $37 billion annual revenue run rate, up 123% year over year, as of the fiscal third quarter of 2026. A $627 billion commercial backlog and 20 million paid Copilot seats sit behind that figure, even as the stock trades near $390 after a one-year decline.
Microsoft's AI business has reached a $37 billion annual revenue run rate, the figure the company reported in the 8-K it filed on April 29, 2026, for its fiscal third quarter of 2026. On the earnings call, CEO Satya Nadella said the AI business had surpassed that run rate, up 123% year over year. The metric is a company disclosure, distinct from reported GAAP revenue and forward guidance.
The cloud engine behind the number
The AI run rate sits inside a wider cloud business that is growing with it. Intelligent Cloud revenue reached $34.681 billion, up 30%, while Azure grew 40% in constant currency. Microsoft Cloud clocked $54.5 billion in the quarter, up 29%.
Demand shows up in the backlog. Commercial remaining performance obligations hit $627 billion, up 99% year over year — contracted revenue queued for future delivery. To serve it, capital expenditures came in at $30.876 billion, up 84.39%, funding the data centers behind the backlog. Copilot adoption is the other signal: paid seats crossed 20 million, up 250% year over year, with Accenture alone taking 740,000.
A stock still below year-ago levels
The operating trajectory has run ahead of the share price. Microsoft closed at $390.49 on July 2, 2026, a one-week gain of 10.67% off a lower base but a one-year decline of 19.85%. Shares had traded at $428.00 at the April 29 filing and reached $450.24 thirty days after the report.
Analyst sentiment aligns with that operating picture. Microsoft carries 12 strong buys, 40 buys, 3 holds, and zero sell ratings, with a target price of $561.11 against a share price near $390. Management said it expects to remain capacity-constrained at least through 2026.
Source: 24/7 Wall St.
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