Microsoft has reported stellar financial results for the first quarter of fiscal year 2026, posting revenue of $77.7 billion, up 18% year-over-year, driven by exceptional growth in its cloud and artificial intelligence (AI) segments. The company’s operating income surged 24% to $38 billion, while net income reached $27.7 billion on a GAAP basis and $30.8 billion non-GAAP, underscoring its continued profitability amid accelerating enterprise AI adoption.
The company’s cloud business remained its strongest growth engine, with cloud revenue rising 26% to $49.1 billion. Microsoft’s flagship cloud platform Azure grew 40% in constant currency, fueled by demand for AI infrastructure, data services, and developer tools. The company’s commercial remaining performance obligation (RPO) rose 51% to $392 billion, reflecting robust future revenue commitments, while bookings more than doubled, largely driven by expansive OpenAI-related contracts.
Microsoft also announced that it has extended its strategic partnership with OpenAI through 2030, securing an additional $250 billion in Azure cloud commitments. This long-term agreement strengthens Microsoft’s position as the leading provider of AI cloud infrastructure, ensuring sustained demand for Azure’s high-performance compute capabilities.
CEO Satya Nadella highlighted the company’s rapid expansion of AI infrastructure to meet growing customer needs, noting that “Microsoft is expanding its AI data center capacity by 80% this year.” This expansion aligns with Microsoft’s broader strategy to embed AI deeply across its product ecosystem — from cloud services to productivity tools.
AI adoption across Microsoft’s platforms continues to accelerate at record pace. The company reported 900 million users engaging monthly with AI features and 150 million users actively using Copilots. Usage of Microsoft 365 Copilot grew 50% quarter-over-quarter, while GitHub Copilot now serves 26 million developers, as Nadella described it, “a developer added every second.”
With AI and cloud innovation at the heart of its business strategy, Microsoft’s Q1 FY2026 results showcase how the company is capitalizing on the global shift toward intelligent, cloud-native computing. Its deepening OpenAI partnership and massive infrastructure investments position it to sustain leadership in the next wave of enterprise AI transformation.
