Microsoft Revenues Jump 18 Percent to $82.9 Billion in FY26Q3

Microsoft announced that it earned a net income of $31.8 billion on revenues of $82.9 billion in the quarter ending March 31, 2026. Those numbers represent gains of 23 percent and 18 percent, respectively, year-over-year (YOY).

“We are focused on delivering cloud and AI infrastructure and solutions that empower every business to eval-max their outcomes in the agentic computing era,” Microsoft CEO Satya Nadella said. “Our AI business surpassed an annual revenue run rate of $37 billion, up 123 percent year-over-year.”

Leaving aside the nonsense of that last sentence, the top level data for the quarter includes:

Capital expenditures are down quarter-over-quarter. For what I believe is the second time in the modern AI era, Microsoft spent less on AI-related capex ($30.9 billon) than it did in the previous quarter sequentially ($37.5 billion). But that’s not the right comparison, of course. Compared to the year-ago quarter, when Microsoft spent $16.7 billion on AI-based capex, Microsoft’s spending in this area has almost doubled.

More Personl Computing. Microsoft’s smallest business posted $13.2 billion in revenues, a decline of 1 percent YOY. Windows revenues from PC makers declined 2 percent in the quarter, Xbox content and services revenues declined 5 percent, and Xbox hardware revenues nosedived 33 percent. Yikes.

Intelligent Cloud. Microsoft’s cloud infrastructure business hit revenues of $34.7 billion in the quarter, up 30 percent YOY. Azure and other cloud services revenue increased 40 percent.

Productivity and Online Services. The business behind Microsoft was again Microsoft’s biggest, with $35 billion in revenues, up 17 percent YOY. Microsoft 365 Commercial cloud revenue was up 19 pecent and Microsoft 365 Consumer cloud revenue increased 33 percent.

I will have a more detailed analysis tomorrow, as always.