Microsoft reported record quarterly revenue of $92.3 billion for the first quarter of fiscal 2027, up 19% year over year, including $10 billion generated through commercial arrangements with OpenAI. The OpenAI-related revenue accounted for nearly 11% of Microsoft’s total quarterly revenue, while the company’s cloud business continued to grow.
According to Microsoft’s earnings announcement on October 28, the results marked its tenth consecutive quarter of record revenue. Net income increased 32% to $36.6 billion under generally accepted accounting principles (GAAP), while operating income rose 21% to $45.9 billion.
Microsoft Generates $10 Billion in Revenue From OpenAI
Microsoft disclosed in its regulatory filing that revenue from OpenAI included revenue-sharing payments and other commercial arrangements. The company generated $24.1 billion from OpenAI during fiscal 2026, while its latest quarterly revenue would represent an annualized $40 billion if maintained.
Microsoft also reported $7.2 billion in outstanding receivables from OpenAI as of September 30, up from $6 billion at the end of June. These amounts represent payments owed for previous transactions rather than additional revenue.
The company did not disclose how much OpenAI-related revenue came from revenue-sharing payments versus Azure cloud services. In November 2025, TechCrunch reported, citing leaked documents, that Microsoft received $865.8 million in net revenue-sharing payments from OpenAI during the first nine months of 2025.
Microsoft and OpenAI Continue Their Partnership Under Revised Agreements
OpenAI reportedly shares 20% of its revenue with Microsoft under an earlier investment arrangement, although neither company has publicly confirmed that percentage. Under an April 2026 agreement, OpenAI must continue revenue-sharing payments through 2030, subject to a cap.
The companies began reducing their exclusive arrangements in October 2025, allowing OpenAI to use competing cloud providers such as Amazon Web Services and Oracle. In return, OpenAI committed to purchasing an additional $250 billion in Azure services.
Microsoft’s ownership stake in OpenAI also declined from approximately 25% in June to 24% in September, compared with around 27% following the October 2025 recapitalization. Microsoft did not specify the reason for the dilution.
Cloud Revenue Grows as Capital Spending Reaches Record High
Microsoft Cloud revenue increased 30% to $63.9 billion, with Azure contributing $33.2 billion and Microsoft 365 nearly $28 billion. However, some cloud revenue also came from traditional enterprise software and applications unrelated to AI.
Under Microsoft’s revised reporting structure, Agents and Infra revenue increased 25% to $76.8 billion, while Devices and Consumer revenue declined 3% to $15.5 billion. Windows OEM and devices revenue fell 22% year over year.
Microsoft’s commercial remaining performance obligation increased 73% to $677 billion, representing revenue committed under existing contracts. Meanwhile, quarterly capital expenditures reached a record $45.2 billion as the company expanded computing infrastructure to meet cloud and AI demand, including services used by OpenAI and Anthropic.
Featured image credits: Wikimedia Commons
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