Microsoft’s Azure cloud business surpassed $100 billion in annual revenue for the first time during fiscal year 2026, supported by growing enterprise demand for cloud infrastructure and artificial intelligence services.
Microsoft’s total annual revenue exceeded $331 billion, representing growth of 18%, while Microsoft Cloud revenue crossed $214 billion after increasing 27%. Azure revenue grew 41% during the full financial year.
For the fourth quarter ended June 30, Microsoft reported revenue of $90 billion, up 18% year on year. Net income increased 31% to $35.77 billion, while Microsoft Cloud generated quarterly revenue of $59.3 billion, an increase of 27%.
“This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats,” Microsoft Chairman and CEO Satya Nadella said.
Microsoft is expanding data-centre capacity as demand continues to exceed its available cloud infrastructure. The company recorded quarterly capital expenditure of $41 billion, with approximately two-thirds allocated to shorter-lived assets, primarily CPUs and GPUs. The remaining investment covered longer-lived assets, including data-centre facilities.
The company is also developing a multi-model AI strategy that allows different models to be selected for specific workloads based on performance, cost and resilience. Microsoft said the approach can help customers avoid dependence on a single model while improving the economics of running AI applications.
Nadella highlighted the company’s use of multiple models in cybersecurity, coding and knowledge-work applications. In cybersecurity, Microsoft’s Project Perception combines AI agents for simulating attacks, investigating threats and supporting remediation.
Microsoft said its model-selection approach allows lower-cost specialised models to process routine tasks while more advanced frontier models are used for complex operations. The company views model diversification as both a cost-efficiency measure and a way to improve service resilience.
Enterprise adoption of Microsoft 365 Copilot also increased during the year. The number of customers with more than 50,000 Copilot seats grew more than sevenfold, while companies including Infosys, Tata Consultancy Services and Wipro purchased at least 60,000 seats each.
