The Tool Desk
Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →Microsoft reported $331.8 billion in revenue for fiscal 2026, up 18% year over year. For the quarter ended June 30, 2026, revenue was $90.0 billion, also up 18%. Microsoft pointed to strong Azure and cloud demand and its first-party AI applications and services as growth drivers; those explanations are management’s, while the revenue figures are company-reported results.
Microsoft’s FY2026 revenue at a glance
The fiscal year ended June 30, 2026. Microsoft’s reported figures show growth across the company and its cloud business, but the different measures describe different things.
| Measure | FY2026 | Q4 FY2026 |
|---|---|---|
| Microsoft revenue | $331.8 billion; up 18% year over year | $90.0 billion; up 18% year over year |
| Microsoft Cloud revenue | $214.4 billion; up 27% | $59.3 billion; up 27% |
| Azure and other cloud services revenue growth | 41% | 43% |
| Productivity and Business Processes revenue | not stated in the cited FY2026 investor metrics | $37.8 billion; up 14% |
Growth rates are year over year against the corresponding prior-year period. Microsoft Cloud revenue is a broad cloud-business measure, while “Azure and other cloud services” is a separate growth measure; neither should be treated as a synonym for total company revenue.
What drove Microsoft’s revenue growth?
Azure and cloud services demand
Microsoft reported that revenue from Azure and other cloud services grew 43% in Q4 and 41% for the full fiscal year. The broader metric includes cloud and AI consumption-based services, GitHub cloud services, Nuance Healthcare cloud services, virtual desktop offerings, and other cloud services. It does not measure Azure infrastructure alone.
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On the earnings call, management said customer demand exceeded available capacity. That helps explain why Microsoft emphasized both demand and continued investment in infrastructure, but it is management’s account of operating conditions.
AI applications and Microsoft 365 Copilot
Microsoft CEO Satya Nadella said Microsoft 365 Copilot had surpassed 30 million paid seats at FY2026 year-end. This is an adoption figure, not a separately reported Copilot revenue total.
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Microsoft 365 Commercial cloud revenue grew 17% for FY2026. That measure covers multiple commercial subscriptions and services—including Microsoft 365 Copilot—as well as products and services such as Enterprise Mobility + Security, parts of Windows Commercial, Power BI, Exchange, SharePoint, Teams, Security and Compliance. It therefore cannot be used to isolate Copilot’s contribution.
How much revenue does Azure make?
Microsoft said on its FY2026 earnings call that Azure annual revenue surpassed $100 billion for the first time. The company did not provide a more precise Azure-only annual revenue figure in the cited materials. Keep that milestone separate from the 43% Q4 and 41% full-year growth rates for “Azure and other cloud services,” which cover a broader set of services.
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Cloud growth came with investment and margin pressure
Microsoft Cloud generated $214.4 billion in FY2026 revenue, up 27%. Its gross margin percentage was 66% for the fiscal year and 65% in Q4. Revenue growth is not the same as profit growth: management attributed year-over-year cloud-margin pressure to business mix, AI infrastructure investment and increased usage, partly offset by efficiency gains.
That distinction matters when assessing the AI expansion. Strong demand and higher cloud revenue indicate scale and momentum, while infrastructure costs and usage affect the economics of serving that demand.
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- A 15" TOUCHSCREEN YOU'LL ACTUALLY USE — Sharp colors, real detail, smooth 120Hz scrolling on the PixelSense touchscreen[1] with LCD display[2]. Tap, scroll, or pinch to zoom - whichever feels right for streaming, editing photos, or daily work.
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What the future-demand figure says—and does not say
Microsoft’s commercial remaining performance obligation (RPO) reached $678 billion at FY2026 year-end, up 84%. RPO represents contracted future revenue obligations, not revenue already earned in the period. Management said roughly 30% was expected to be recognized as revenue over the next 12 months. The headline figure includes OpenAI commitments; Microsoft also reported RPO growth of 25% excluding OpenAI.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Growth was not uniform across Microsoft
In Q4 FY2026, Microsoft reported Windows OEM and Devices revenue down 7% and Xbox content and services revenue down 10%. Search advertising revenue excluding traffic acquisition costs grew 10%. These results show why the company-wide 18% revenue increase should not be read as every product area growing at the same pace.
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- Power that lasts all day – With 20 hours of battery life[3], the new Surface Laptop powers through your entire day, so you can create, work and stream from morning to night without reaching for a charger.
- Work at the speed of your ideas – Built with the latest Qualcomm Snapdragon X2 Elite (12 Core) processors, Surface Laptop delivers fast, AI‑accelerated performance—making it the most powerful Surface laptop for everything from multitasking to demanding workloads.
- The ports you need – Charge on-the-go, transfer data fast, or create the ultimate desktop set up with two USB-C / USB4[4] ports.
- Built-in AI Companion – Work smarter, create freely, and communicate with confidence—Copilot[5] on Windows 11 is always there to help.
Microsoft’s explanation of the results
Nadella said, “This fiscal year, we delivered over $331 billion in revenue, with growth accelerating to 18%, driven by strong demand across both the Azure platform and our first-party AI applications and services.” This is management’s characterization of the drivers, not a separate measurement of how much revenue each contributed.
In the company’s July 29, 2026 earnings release and FY2026 investor metrics, Microsoft reported the financial measures summarized above. The earnings-call statements about demand, capacity, Azure’s milestone and Copilot seats are management disclosures.
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