TLDR
- Microsoft shares rebound 2.51% after hours to $400.35 following Q4 earnings
- Quarterly revenue rises 18% to $90 billion as cloud sales strengthen further
- Azure revenue grows 43% and tops $100 billion for the full 2026 fiscal year
- GAAP net income climbs 31% to $35.8 billion while diluted EPS reaches $4.81
- Windows and Xbox revenue decline while Microsoft cloud demand remains strong
Microsoft Corp. (MSFT) stock fell 0.71% to $390.54, then rose 2.51% after hours to $400.35 following quarterly results. Fourth-quarter revenue reached $90.0 billion, while rapid Azure growth supported the rebound. However, weaker Windows and Xbox revenue showed mixed performance across Microsoft’s wider business.
Microsoft Q4 Revenue and Earnings Rise
Microsoft reported an 18% revenue increase for its fiscal fourth quarter ended June 30, 2026. Operating income rose 18% to $40.6 billion, while GAAP net income increased 31% to $35.8 billion. GAAP diluted earnings per share climbed 32% to $4.81, beating management’s earlier forecast.
Non-GAAP net income advanced 22% to $35.3 billion, while adjusted diluted earnings reached $4.74. Several discrete items added $0.27 to diluted earnings per share versus Microsoft’s April guidance. These included an Anthropic investment gain and lower retirement costs, partly offset by severance expenses.
Microsoft also recorded Xbox impairment charges, which reduced part of the quarterly earnings benefit. After adjustments, revenue, operating income, and diluted earnings per share still exceeded Microsoft’s expectations. Strong cloud sales helped Microsoft expand profit while maintaining substantial investment in data infrastructure.
Azure Growth Drives Microsoft Cloud Results
Azure and other cloud services revenue grew 43%, leading Microsoft’s main business lines. Microsoft Cloud revenue increased 27% to $59.3 billion as demand for infrastructure and software remained strong. Commercial remaining performance obligations jumped 84% to $678 billion, expanding Microsoft’s contracted revenue base.
Azure surpassed $100 billion in annual revenue for the first time during fiscal 2026. Microsoft 365 Copilot also exceeded 30 million paid seats as companies expanded workplace automation use. These gains strengthened Microsoft’s position across cloud infrastructure, productivity software, and artificial intelligence services.
Intelligent Cloud revenue rose 32% to $39.3 billion, making it Microsoft’s fastest-growing operating segment. Productivity and Business Processes revenue increased 14% to $37.8 billion, supported by Microsoft 365 and LinkedIn. Dynamics 365 revenue grew 13%, while Microsoft 365 Consumer cloud revenue advanced 24%.
Full-Year Profit Rises Despite Gaming Weakness
More Personal Computing revenue declined 4% to $12.9 billion as Windows and gaming weakened. Windows OEM and Devices revenue fell 7%, while Xbox content and services revenue dropped 10%. Search advertising revenue excluding traffic acquisition costs increased 10%, partly limiting the segment decline.
For fiscal 2026, Microsoft generated $331.8 billion in revenue, an 18% annual increase. Operating income climbed 21% to $155.2 billion, while GAAP net income rose 31% to $133.7 billion. GAAP diluted earnings per share increased 32% to $17.95, reflecting stronger companywide profitability.
Microsoft produced $55.4 billion in quarterly operating cash flow and $182.9 billion for the full year. Property and equipment additions reached $35.8 billion during the quarter and $115.9 billion during fiscal 2026. The company returned $10.2 billion through dividends and share repurchases while funding continued infrastructure expansion.
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