Microsoft (MSFT) reported first-quarter fiscal 2026 earnings of $4.13 per share, beating estimates by 13.15% and increasing 25.2% year-over-year. Revenues of $77.6 billion increased 18.4% and beat estimates by 3.62%. Commercial bookings surged 112%, Azure commitments from OpenAI drove growth, and cloud revenues soared 26%.
In segmental details, the Productivity & Business Processes segment contributed 42.5% of total revenues, with M365 commercial products and cloud services driving growth. Dynamics 365 revenues jumped 18%, and segment gross margin dollars increased 19%. The Intelligent Cloud segment saw a 28% revenue increase, driven by Azure and other cloud services growing 40%.
More Personal Computing segment revenues increased 4%, with strength in Windows OEM. Search and news advertising revenues rose 16%, and in Gaming, revenues decreased 2%. Microsoft reported 500 million monthly active users across gaming platforms. Segment gross margin dollars increased 11%, and operating expenses rose 4%.
Microsoft announced plans to increase AI capacity by 80% this year and double data center footprint in two years. Azure AI Foundry serves 80,000 customers, and data and analytics products saw significant growth. Microsoft 365 and Copilot momentum continued with over 900 million monthly active users of AI features.
Operating results showed a 17.9% increase in gross profit, with operating income rising across segments. Capital expenditures totaled $34.9 billion, with a focus on short-lived assets for Azure demand. Cash flow from operations increased 32% to $45.1 billion, and Microsoft returned $10.7 billion to shareholders.
Microsoft closed a new agreement with OpenAI, securing exclusive rights for Azure through 2030. For the second quarter of fiscal 2026, Microsoft expects total revenues between $79.5 billion and $80.6 billion, representing growth of 14% to 16%. The company anticipates solid growth across segments and strong commercial bookings.
Read more at Nasdaq.: Microsoft Q1 Earnings & Revenues Beat on Cloud, AI Strength