01—Abstract
Summary
Summary of the 10-K filed July 29, 2026. Cited figures are marked; the original filing is the authoritative source.
Microsoft Corporation's (MSFT) fiscal year 2026 performance demonstrates robust growth, primarily driven by its Intelligent Cloud segment, which saw a 30%a revenue increase, largely fueled by Azure's 41% surge.
The Productivity and Business Processes segment also performed strongly, with a 16%b revenue uplift, notably from Microsoft 365 Commercial and Consumer cloud services showing significant growth. The company continues its aggressive investment in Artificial Intelligence (AI), integrating AI capabilities across its product portfolio, including Microsoft 365 Copilot and Azure AI offerings. This strategic focus on AI, coupled with strong cloud adoption, positions Microsoft for continued expansion.
Despite a slight decrease in the More Personal Computing segment, mainly due to a decline in Xbox content and services and hardware sales, the company's overall revenue grew by a solid 18%, reaching $331.8 billionc. Microsoft also returned substantial capital to shareholders through share repurchases and dividends, underscoring its commitment to shareholder value.
02—Key points
Key Highlights
- Microsoft Cloud revenue increased by 27% to $214.4 billion in fiscal year 2026.
- Azure and other cloud services revenue experienced a substantial 41% growth.
- Microsoft 365 Commercial and Consumer cloud revenues grew by 16% and 28% respectively.
- Total revenue increased by 18% to $331.8 billion, driven by cloud segment growth.
- The company returned $10.2 billion to shareholders in Q4 FY2026 through share repurchases and dividends.
- Significant investments continue in AI infrastructure and talent to support product development and AI offerings.
- Activision Blizzard acquisition completed in October 2023, integrated into the More Personal Computing segment, accelerating gaming business growth.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2026, Microsoft Corp kept $0.40.
- Revenue$331.84B100.0%
- Cost of revenue−$106.37B32.1%
- Gross profit$225.47B67.9%
- Operating costs−$70.23B21.2%
- Operating income$155.24B46.8%
- Interest, other & tax−$21.49B6.5%
- Net income$133.75B40.3%
Where FY2026 revenue went
$331.84B- Net income: $133.75B, 40% of revenue
- Cost of revenue: $106.37B, 32% of revenue
- R&D: $35.56B, 11% of revenue
- Other operating costs: $34.67B, 10% of revenue
- Interest, other & tax: $21.49B, 6.5% of revenue
Kept 40% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2026filed July 29, 2026Financial Statements
FY2026 against FY2025
| Line item | FY2026FY2025 | Change |
|---|---|---|
| Revenue | $331.84B$281.72B | +17.8% |
| Cost of Revenue | $106.37B$87.83B | +21.1% |
| Gross Profit | $225.47B$193.89B | +16.3% |
| R&D Expenses | $35.56B$32.49B | +9.5% |
| Operating Expenses | $70.23B$65.36B | +7.4% |
| Operating Income | $155.24B$128.53B | +20.8% |
| Net Income | $133.75B$101.83B | +31.3% |
| EPS (Basic) | $18.00$13.70 | +31.4% |
| EPS (Diluted) | $17.95$13.64 | +31.6% |
| Shares Outstanding (Basic) | 7.43B7.43B | −0.1% |
| Shares Outstanding (Diluted) | 7.45B7.46B | −0.2% |
05—Questions
Frequently Asked Questions
What were the key growth drivers for Microsoft in FY2026?
The primary growth driver for Microsoft in FY2026 was its Microsoft Cloud offerings, particularly Azure, which saw a 41% increase in revenue. Growth in Microsoft 365 Commercial and Consumer cloud services also contributed significantly to the 18% overall revenue increase.
How is Microsoft investing in Artificial Intelligence (AI)?
Microsoft is heavily investing in AI across its business. This includes integrating AI capabilities like Microsoft 365 Copilot into its productivity suite and expanding its Azure AI offerings. The company is also investing in AI infrastructure, talent, and data to support product development and its strategic partnership with OpenAI.
What is the impact of the Activision Blizzard acquisition on Microsoft's financial performance?
The acquisition of Activision Blizzard, completed in October 2023, is integrated into the More Personal Computing segment. While the provided filing does not detail its specific FY2026 revenue contribution, it is expected to accelerate growth in Microsoft's gaming business across various platforms and ecosystems.
How is Microsoft returning capital to shareholders?
In the fourth quarter of fiscal year 2026, Microsoft returned $10.2 billion to shareholders through share repurchases and dividends. For the full fiscal year 2026, the company declared dividends totaling $27.0 billion and repurchased shares valued at $16.7 billion.
06—Continue