Microsoft opens the
books on Wednesday evening.

Microsoft Cloud Revenue And Margins

microsoft_cloud_revenue_and_margins

Microsoft Cloud revenue hit $54.5 billion with 29% growth, yet its gross margin percentage decreased due to substantial ongoing investments in AI infrastructure and product usage.

"Microsoft Cloud revenue was $54.5 billion and grew 29% and 25% in constant currency, reflecting strong demand across the Azure platform and our first-party AI applications and services. Microsoft Cloud gross margin percentage was slightly better than expected at 66% and down year-over-year due to continued investments in AI, partially offset by the ongoing efficiency gains noted earlier."

- Amy Hood, CFO - Q3 FY26 Earnings Call - April 29, 2026

Capex Increase And Constraints

capex_increase_and_constraints

Capital expenditures are expected to rise to over $40 billion in Q4, reflecting continued investment in AI infrastructure, with capacity constraints anticipated to last through 2026.

"We expect CapEx spend to increase to over $40 billion as we continue to bring more capacity online. The sequential increase includes roughly $5 billion from higher component pricing, as well as the impact from finance leases, which add variability given the full value is recorded in the period of lease commencement. Even with these additional investments and continued efforts to bring GPU, CPU, and storage capacity online faster, we expect to remain constrained at least through 2026."

- Amy Hood, CFO - Q3 FY26 Earnings Call - April 29, 2026

Ai Business Arr Growth

ai_business_arr_growth

Microsoft's AI business has achieved an annual revenue run rate exceeding $37 billion, demonstrating robust growth of 123% year-over-year.

"As Satya shared, our AI business annual revenue run rate surpassed $37 billion this quarter, growing 123% year-over-year."

- Amy Hood, CFO - Q3 FY26 Earnings Call - April 29, 2026

M365 Copilot Adoption

m365_copilot_adoption

Microsoft 365 Copilot seat adds surged by 250% year-over-year, now totaling over 20 million paid seats, with major enterprises like Accenture committing to large deployments.

"In knowledge work, it was another record quarter for Microsoft 365 Copilot seat adds, which increased 250% year-over-year, representing our fastest growth since launch. Quarter-over-quarter, we continue to see acceleration and now have over 20 million Microsoft 365 Copilot paid seats. The number of customers with over 50,000 seats quadrupled year-over-year, Accenture now has over 740,000 seats, our largest Copilot win to date."

- Satya Nadella, Chairman and Chief Executive Officer - Q3 FY26 Earnings Call - April 29, 2026

Azure Q3 Performance And Demand

azure_q3_performance_and_demand

Azure and other cloud services revenue grew 39% in constant currency, surpassing expectations, yet strong customer demand continues to exceed available capacity.

"In Azure and other cloud services, revenue grew 40% and 39% in constant currency against a prior year that included accelerating growth. Results were ahead of expectations as we delivered capacity earlier in the quarter, enabling increased consumption across both AI and non-AI services. Strong customer demand across workloads, customer segments, and geographic regions continues to exceed available capacity."

- Amy Hood, CFO - Q3 FY26 Earnings Call - April 29, 2026

Github Copilot Pricing Model

github_copilot_pricing_model

GitHub Copilot is shifting to a usage-based pricing model effective June 1st, aiming to align pricing with actual usage and value.

"Just this week, we announced a business model transition in GitHub Copilot that will align pricing with usage and value that takes effect on June 1st of this year."

- Amy Hood, CFO - Q3 FY26 Earnings Call - April 29, 2026