Microsoft reported record revenue of $92.3 billion for the first quarter of fiscal 2027, up 19% from the same period last year, driven largely by growth in its cloud business. The results marked the company’s tenth consecutive quarter of record revenue, while net income rose 32% to $36.6 billion.
According to Microsoft’s earnings announcement released on October 28, the company recorded operating income of $45.9 billion, up 21% year over year. Microsoft Cloud generated $63.9 billion in revenue during the quarter ended September 30, representing a 30% increase from the previous year.
Azure Leads Microsoft’s Cloud Revenue Growth
Azure generated $33.2 billion in quarterly revenue, making it the largest contributor to Microsoft’s cloud revenue, while Microsoft 365 accounted for nearly $28 billion. However, not all cloud revenue came directly from artificial intelligence, as Azure also supports traditional enterprise software and software-as-a-service applications.
Microsoft has reorganized its business reporting into two main segments: Agents and Infra, and Devices and Consumer. Agents and Infra generated $76.8 billion in revenue, up 25%, while Devices and Consumer recorded $15.5 billion, a decline of 3% from the previous year.
Within the Devices and Consumer segment, Windows OEM and devices revenue fell 22% year over year.
Microsoft Reports $10 Billion in Revenue From OpenAI
Microsoft also reported $10 billion in revenue associated with OpenAI, according to its filing with the US Securities and Exchange Commission. OpenAI continues to operate a substantial portion of its services on Microsoft’s Azure infrastructure, despite expanding its relationships with other cloud providers, including Amazon Web Services and Oracle.
Anthropic, another AI developer, also uses Azure for its cloud infrastructure. Meanwhile, Microsoft’s commercial remaining performance obligation increased 73% to $677 billion, representing future revenue committed under existing contracts, including agreements involving AI companies.
Capital Expenditures Reach Record $45.2 Billion
Microsoft’s capital expenditures exceeded $45.2 billion during the quarter, setting another quarterly record as the company continued investing in infrastructure to support its cloud and AI operations.
The spending comes as Microsoft prepares to meet its existing customer commitments, including those involving AI developers that depend on its computing infrastructure. Other major cloud providers are also allocating substantial resources to expand their computing capacity and fulfill contractual obligations.
Featured image credits: Wikimedia Commons
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