To The Moon

Microsoft released its fiscal 2026 fourth-quarter earnings on the 29th, reporting revenue of $90 billion, an 18% year-over-year increase, driven by strong cloud business growth and accelerated AI application deployment. Net profit reached $35.8 billion, surging 31% compared to the same period last year, exceeding market expectations. For the full fiscal year 2026, Microsoft total revenue reached $331 billion, an 18% increase from the prior fiscal year.

The earnings report highlights significant growth in Microsoft's core cloud business. Chief Executive Officer Satya Nadella stated that during the fiscal year 2026 ending in June, the Azure cloud business surpassed the $100 billion annual revenue milestone for the first time. In the fourth quarter, Azure cloud revenue grew 43% year-over-year, accelerating from the 40% growth rate in the previous quarter. Meanwhile, the number of paid users for the Copilot AI assistant embedded in Office software expanded significantly, rising from 20 million in the prior quarter to 30 million, indicating a rapid acceleration in commercialization.

Addressing current market concerns regarding infrastructure investment and technology paths, Chief Financial Officer Amy Hood emphasized that customer demand for cloud services and computing power continues to exceed current capacity. She expects cloud business growth to remain at a high rate of approximately 45% in the next fiscal quarter. Nadella also pointed out that enterprises should establish a multi-model parallel architecture when deploying artificial intelligence to avoid over-reliance on a single system, thereby enhancing technological resilience and safeguarding data asset security.

Regarding capital expenditures and financial status, Microsoft reported capital expenditures of $41 billion in the fourth quarter. The company adjusted its capital expenditure forecast for the 2026 calendar year from a previous estimate of approximately $190 billion to $175 billion, primarily due to extending the depreciation period for data centers and office buildings from 15 to 25 years. The actual underlying investment plan remains unchanged. Despite the continued high level of AI infrastructure investment by tech giants, Microsoft maintained ample free cash flow. Additionally, as part of a business structure optimization, Microsoft implemented a layoff of 3,200 employees in its gaming division (Xbox) this month.