News · October 29, 2026, 06:31 UTC
Microsoft reported stronger-than-expected results for the quarter ended September 30, 2026, with revenue rising 19% to $92.3 billion and net income climbing 32% to $36.6 billion, according to the company’s earnings release published October 28, 2026. The figures surpassed Wall Street estimates of $90.69 billion in revenue and adjusted earnings per share of $4.73, as reported by KuCoin.
Shares of the Redmond, Washington-based company rose almost 2.9% in after-hours trading in New York on Wednesday, BBC News reported. The results arrived days after Microsoft said on Monday it would offer buyouts to around 60,000 employees as it redirects spending toward artificial intelligence infrastructure.
What happened
Microsoft’s adjusted diluted earnings per share came in at $4.89, up 18% year over year on a non-GAAP basis, while GAAP diluted earnings per share was $4.92, according to the company’s release. Operating income rose 21% to $45.9 billion, beating the $44.06 billion estimate cited by KuCoin.
Microsoft Cloud revenue reached $63.9 billion, up 30% year over year, with growth accelerating from the prior quarter. Azure revenue grew 48% to $33.17 billion, beating forecasted growth of about 45%, per KuCoin. The company disclosed Azure revenue separately for the first time since the service launched in 2010.
Under a new reporting structure introduced this fiscal year, Microsoft split revenue into AI agents and infrastructure, which brought in $76.8 billion, and devices and consumer, which contributed $15.5 billion. Meanwhile, commercial remaining performance obligation increased 73% to $677 billion.
Capital expenditures totaled $39.4 billion, well below the estimated $46.59 billion, according to KuCoin, leaving free cash flow at $18.6 billion. Microsoft returned $10.2 billion to shareholders through dividends and share repurchases.
Chief Executive Satya Nadella said the company was helping organizations “build and own their own intelligence” and translating innovation into “growing adoption and real-world impact across every industry.” Chief Financial Officer Amy Hood said results “exceeded expectations across revenue, operating income, and earnings per share.”
Analysis: Why it matters for investors
Microsoft’s quarter suggests that AI-driven cloud demand remains robust while spending discipline may be improving. The gap between capital expenditures of $39.4 billion and analyst expectations of $46.59 billion, combined with accelerating Azure growth, could ease concerns that AI infrastructure costs are outpacing returns. However, if the company’s forecast for more than $50 billion in capital spending next quarter proves accurate, the spending debate is likely to resurface.
The contrast with Alphabet was stark. Google’s parent reported a 25% drop in quarterly net profit and saw its shares fall 9.75%, while Microsoft’s rose. Investors appear to be rewarding Microsoft for cloud momentum paired with lighter-than-expected outlays, though the durability of that combination is not guaranteed.
The buyout program covering roughly 60,000 workers may support margins in coming quarters, but it also carries execution risk. Whether cost savings materialize as planned has not been disclosed.
Who is affected
Employees in teams across Canada, India, the UK and the US are eligible for the voluntary redundancy offer, which Microsoft said would provide financial support and career planning resources. The company employs more than 220,000 people worldwide.
Investors in Microsoft and its big-tech peers are affected, given that recent results from Amazon, Meta and Alphabet are being scrutinized for signs of whether heavy AI spending is sustainable. Indeed, big tech companies are expected to spend more than $700 billion this year on AI chips and data centers, according to BBC News.
Enterprise customers stand to benefit from Microsoft’s expanding AI agent and cloud offerings, though pricing and adoption trends for products such as Microsoft 365 Copilot have not been detailed in the sources.
What is still uncertain
Microsoft flagged risks including “substantial investments” in AI among uncertainties that could affect its finances. The company has not disclosed the expected cost of the buyout program or the timing of related savings. It also remains unclear whether the lower capital expenditures reflect timing shifts or a durable change in spending plans. The sources do not say how investors should weigh these factors.
Conclusion: What to watch next
Microsoft guided next-quarter revenue to $96.0 billion to $97.1 billion, representing 18% to 19% growth, with Azure growth projected at 49% to 50% and capital expenditures expected to top $50 billion, according to KuCoin. Those figures will test whether the company can sustain cloud acceleration while absorbing higher AI infrastructure costs. The average analyst recommendation for the stock is “buy” with an average target price of $610.34, KuCoin reported. Investors will also watch how peers frame their own AI spending when remaining big-tech results arrive.
Frequently Asked Questions
What were Microsoft's revenue and profit for the quarter ended September 30, 2026?
Microsoft reported revenue of $92.3 billion, up 19% year over year, and net income of $36.6 billion, up 32%, according to its earnings release. Adjusted earnings per share was $4.89.
How did Microsoft shares react to the earnings report?
Microsoft shares rose almost 2.9% in after-hours trading in New York on Wednesday, BBC News reported. KuCoin cited a 2.7% after-hours gain to $546.21.
What did Microsoft say about Azure and cloud growth?
Microsoft Cloud revenue was $63.9 billion, up 30% year over year, and Azure revenue grew 48% to $33.17 billion. The company guided Azure growth to 49% to 50% for the next quarter.
What is Microsoft's voluntary buyout program?
Microsoft said on Monday it would offer buyouts to around 60,000 employees in teams across Canada, India, the UK and the US. The company said the program would provide financial support and career planning resources.
What is Microsoft's guidance for the next quarter?
Microsoft projected revenue of $96.0 billion to $97.1 billion, 18% to 19% growth, with capital expenditures expected to top $50 billion. Azure growth was forecast at 49% to 50%.
AI Notice: This article was created wholly or predominantly with the assistance of artificial intelligence and was published without human editorial review.
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