Microsoft 2026 Q1 earnings: Azure growth continues as AI spend grows

Microsoft reported Q1 2026 financial performance today with earnings per share of $3.72 on revenue of $77.7 billion, exceeding analyst estimates.

In announcing the results, CEO Satya Nadella noted the impact that the company’s cloud and AI portfolio are having. “It’s why we continue to increase our investments in AI across both capital and talent to meet the massive opportunity ahead,” he stated.

Microsoft CFO Amy Hood also commented on the strong start, stating, “Continued strength in the Microsoft Cloud reflects the growing customer demand for our differentiated platform.” 

The company noted growing investments related to AI that are impacting factors like capital expenditure, which rose 74%, Cloud margin due to AI infrastructure, which decreased 68%, and growing cost of revenue in various areas.

Business highlights announced by the company include:

• Azure and other cloud services revenue growth of 40%.
• Dynamics 365 revenue growth of 18%, and the company did not report on other Dynamics on-premises revenue.
• Microsoft 365 Commercial cloud revenue growth of 17%.
• Commercial booking grew 112% driven by Azure commitments from OpenAI.

Last quarter, Microsoft reported Q4 2025 financial performance of $3.65 EPS on revenue of $76.4 billion, exceeding analyst estimates. Azure and other cloud services revenue grew 39%.

Q1 of 2025 saw Microsoft exceed estimates on EPS of $3.30 and $65.6 billion. Dynamics products and services were up 14% at that time, with Dynamics 365 revenue up 18%.