Azure Grows 48% as Microsoft Posts $92.3 Billion Quarter

Quick Facts

• Microsoft reported Q1 FY2027 revenue of $92.28 billion, up 19% year over year, beating the analyst consensus of $90.62 billion.
• Azure grew 48% to $33.17 billion, exceeding guidance of 44% to 45% growth and accounting for nearly three-quarters of Microsoft's net new revenue.
• CFO Amy Hood guided Azure to 49% to 50% growth in Q2, well above the 45.1% analyst consensus.

Microsoft posted its strongest cloud quarter on record, with Azure growing 48% and shares rising 4% in extended trading after the company reported results on October 28, 2026.

Total revenue reached $92.28 billion, up 19% from a year ago. GAAP net income rose 32% to $36.63 billion, or $4.92 per share. Non-GAAP EPS came in at $4.89, beating the analyst consensus of $4.72 by $0.17.

Azure Takes the Lead

For the first time, Microsoft disclosed Azure revenue in dollars. The number: $33.17 billion for the quarter ended September 30, 2026, according to Microsoft's SEC 8-K filing. That beat Visible Alpha's estimate of $32.84 billion by roughly $330 million.

Azure is now Microsoft's single largest business. The segment increased from $22.38 billion a year ago, with the unit accounting for nearly three-quarters of the company's total net new revenue in the quarter.

Growth came despite capacity delays from third-party providers. CFO Amy Hood said engineering teams delivered better-than-expected gains across GPU fleets, CPUs, storage, and software, freeing up additional capacity for Azure Foundry. Foundry revenue more than tripled year over year, with over 120,000 customers on the platform.

Demand Outpacing Supply

Hood told analysts on the earnings call that she still sees demand exceeding supply. She guided Azure growth at 49% to 50% in constant currency for fiscal Q2, well above the 45.1% Street consensus. She also said calendar-year 2026 capital expenditures would reach approximately $170 billion, with spending expected to exceed $50 billion in the current quarter alone.

Operating cash flow reached $58 billion, up 29% year over year. Free cash flow was $18.6 billion after $45.2 billion in capital expenditures. Commercial remaining performance obligations hit $677 billion, up 73%.

Copilot Gains Traction

CEO Satya Nadella highlighted accelerating adoption of Microsoft's Copilot AI products. Daily Copilot users rose nearly 50% quarter over quarter and more than fivefold year over year. Automated tasks nearly doubled since July. User satisfaction improved nearly 20% quarter over quarter to an all-time high.

The number of customers with more than 50,000 Copilot seats rose more than eightfold year over year. Volkswagen announced plans to deploy Copilot to more than 330,000 employees. Thousands of customers have purchased the E7 enterprise licensing suite, Nadella said.

Nadella described Copilot as the new operating system for work and called enterprise AI adoption a decade-long opportunity, not a short-term compute-buying cycle driven by a handful of large customers.

One Weak Spot

Windows OEM revenue fell 22% in the quarter, a notable decline within the Devices and Consumer segment, which posted $15.5 billion in revenue, down 3% year over year. The rest of the business largely offset that weakness.

Microsoft Cloud revenue, which includes Azure, Microsoft 365, Dynamics, and LinkedIn cloud services, grew 30% to $63.9 billion. The Agents and Infrastructure segment brought in $76.8 billion, up 25%.

Nadella closed the call with a direct statement: "Based on the demand we see, the strength of our products, and the efficiency we are driving across the stack, I've never been more confident in the long-term returns for our investments."