Microsoft Reports 18% Revenue Growth and 20% Profit Increase Driven by Cloud and AI

Deep News05:01

Microsoft Corporation announced its financial results for the third quarter, ended March 31, 2026, showing significant growth compared to the same period in the prior fiscal year.

Revenue reached $82.9 billion, an increase of 18% year-over-year, or 15% in constant currency. Operating income was $38.4 billion, up 20% year-over-year, or 16% in constant currency.

Net income under Generally Accepted Accounting Principles (GAAP) was $31.8 billion, a 23% increase. On a non-GAAP basis, which excludes the impact of the OpenAI investment, net income was $31.79 billion, rising 20% year-over-year, or 18% in constant currency.

Diluted earnings per share (EPS) were $4.27 on a GAAP basis, up 23%. Non-GAAP diluted EPS was also $4.27, an increase of 21% year-over-year, or 18% in constant currency. The non-GAAP figures adjust for the OpenAI investment.

Satya Nadella, Chairman and Chief Executive Officer of Microsoft, stated, "Our focus on delivering cloud and AI infrastructure and solutions is empowering every organization to maximize outcomes in the age of agentic computing. Our AI business now exceeds $37 billion in annualized revenue, growing 123% year-over-year."

Amy Hood, Executive Vice President and Chief Financial Officer, commented, "We exceeded expectations for revenue, operating income, and EPS, reflecting strong execution and growing demand for the Microsoft Cloud."

Microsoft Cloud revenue was a standout performer, reaching $54.5 billion, a 29% increase year-over-year, or 25% in constant currency. Commercial remaining performance obligation surged to $627 billion, up 99%.

Segment performance was mixed. The Productivity and Business Processes segment generated $35.0 billion in revenue, up 17% (13% constant currency), driven by growth in Microsoft 365 Commercial and Consumer clouds, LinkedIn, and Dynamics 365. The Intelligent Cloud segment revenue grew 30% (28% constant currency) to $34.7 billion, with Azure and other cloud services revenue increasing 40% (39% constant currency). Conversely, the More Personal Computing segment revenue declined 1% (3% constant currency) to $13.2 billion, with decreases in Windows OEM and Xbox content and services, partially offset by growth in search and news advertising.

During the quarter, Microsoft returned $10.2 billion to shareholders through dividends and share repurchases.

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