Microsoft Corporation (MSFT)

Microsoft closed its fiscal year on 30 June with revenue of $331.8 billion, up 18 percent, and net income of $133.7 billion, up 31 percent 1. Gains on its OpenAI stake added $5.0 billion of that profit; without them net income rose 22 percent 12. Azure, its rented computing and AI service, passed $100 billion in yearly revenue for the first time 1.

The money behind it is computing power: spending on property and equipment, largely datacenters and their servers, reached $115.9 billion, up 80 percent (computed) 26. The finance chief said demand still exceeds the capacity Microsoft can supply 6. Contracted revenue not yet earned, the commercial remaining performance obligation, rose 84 percent to $678 billion 1.

The newest filed event is a customer's: Anthropic's public S-1 of 26 October says it committed to spend at least $44.9 billion with Microsoft between November 2026 and May 2033 4. Microsoft also holds equity in Anthropic, and it booked a $3.2 billion gain on that investment last quarter 41.

Microsoft reports its first quarter of fiscal 2027 after the market closes on 28 October, for the first time in two new segments, Agents and Infra and Devices and Consumer 53. The open question is whether Azure growth of 44 to 45 percent in constant currency, the company's own outlook, holds while capacity stays short 36.

Satya Nadella became chief executive in 2014, after running the cloud and enterprise unit 10. In April 2014 Microsoft bought Nokia's phone business, and in fiscal 2015 it sold 36.8 million Lumia phones 11. Then it wrote off $7.5 billion of the phone business, and net income fell to $12.2 billion from $22.1 billion 11.

The pivot was toward subscriptions and the cloud 12. In December 2016 Microsoft bought LinkedIn, the professional network, for $27.0 billion, and revenue rose 5 percent in fiscal 2017, helped by LinkedIn and Office 12. In June 2018 it agreed to buy GitHub, the code-sharing site, for $7.5 billion in stock 13.

Fiscal 2018 revenue rose 14 percent to $110.4 billion with growth in every segment 13. Net income still fell to $16.6 billion from $25.5 billion, because the 2017 U.S. tax law brought a one-time net charge of $13.7 billion 13.

The pandemic year showed how far the shift had gone: fiscal 2020 revenue rose 14 percent to $143.0 billion, with growth in every segment, led by server products and cloud services 14. Net income reached $44.3 billion 14.

Microsoft kept buying: ZeniMax, a game publisher, for $8.1 billion in March 2021, and Nuance, a speech recognition company, for $18.8 billion in March 2022 15. Growth slowed to 7 percent in fiscal 2023, to $211.9 billion, while Windows and devices declined 15. In January 2023 it took a $1.2 billion charge for job cuts and office consolidation 15.

The same year the OpenAI partnership began to pay off: Azure ran all of OpenAI's workloads, and Microsoft put OpenAI's models across its own products 15. In October 2023 it completed the $75.4 billion purchase of Activision Blizzard, the game publisher 16. Fiscal 2024 revenue rose 16 percent to $245.1 billion, with Azure and gaming leading 16.

Fiscal 2025 revenue rose 15 percent to $281.7 billion, again driven by Azure, and net income reached $101.8 billion 17. Spending on property and equipment had climbed from $28.1 billion in fiscal 2023 to $64.6 billion 17.

Fiscal 2026 added $50.1 billion of revenue, an 18 percent rise driven by the Microsoft Cloud 2. Azure and other cloud services grew 41 percent, while the XBOX business fell 7 percent on weaker content and console sales 2. The cost of running AI pulled the Microsoft Cloud gross margin, revenue minus the direct cost of delivering it, down to 66 percent 2.

Azure and the AI platform

Azure rents computing power, storage and AI models to businesses by use 3. On the basis Microsoft now reports, Azure brought in $101.9 billion in fiscal 2026, up 40 percent 3. In the June quarter it grew 43 percent, and the company said capacity limited it 16.

Synergy Research puts Microsoft second in cloud infrastructure in the June quarter, with 20 percent of the world market against Amazon's 28 percent and Google's 15 percent 18. Foundry, its model service, offers more than 11,000 models, including OpenAI's, Anthropic's, Mistral's, xAI's and its own MAI family 106.

Microsoft also designs chips: Nadella said its Maia 200 delivers 30 percent better performance per dollar than the latest hardware in its fleet 6. It added 88 datacenters in fiscal 2026, 31 of them in the fourth quarter 6.

Microsoft 365 and Copilot

Microsoft 365 is the subscription for Office apps, email, Teams and security, sold per user 2. Its cloud revenue, restated to include GitHub and Security Copilot, was $100.3 billion in fiscal 2026 3. Paid commercial seats exceed 450 million, and seats grew 6 percent 102.

Microsoft 365 Copilot, the AI assistant inside those apps, passed 30 million paid seats, and net seat additions more than doubled in the June quarter 6. Its business add-on was listed from $18.00 a user a month, billed yearly, on 27 October 19. GitHub Copilot, the coding assistant, has 50 million users, Nadella said 6.

Licensing, Dynamics and LinkedIn

Productivity and server licensing, the software customers install on their own machines, brought in $37.3 billion in fiscal 2026 3. Industry solutions, which joins Dynamics 365 business software with LinkedIn's recruiting and sales tools, brought in $20.3 billion 3. Consulting and support, now called Frontier and support services, added $8.3 billion 3.

Search, Windows and XBOX

Search and advertising, Bing plus LinkedIn's ads and Premium subscriptions, brought in $24.8 billion in fiscal 2026 3. Windows licences sold with new PCs plus Surface devices brought in $17.1 billion 3. XBOX fell to $21.8 billion from $23.5 billion, and console revenue dropped 29 percent on fewer units 32.

Nadella said Microsoft is resetting XBOX across content, platform and operations, and the company took impairment and severance charges there 61. The new Devices and Consumer segment earned $18.9 billion of operating profit in fiscal 2026, against $136.4 billion for Agents and Infra 3.

Plants, people, rivals, problems

Microsoft owns about 520 acres at its Redmond headquarters and holds 112 million square feet of space worldwide, owned and leased 2. It has signed $329.1 billion of datacenter leases that have not yet started, running from fiscal 2027 to fiscal 2033 2.

It employed about 223,000 people on 30 June, 121,000 of them in the U.S. 2. Nadella is chairman and chief executive, and Amy Hood is finance chief 1. Costs of its Voluntary Retirement Program came in below expectations in the June quarter 1.

Its AI rivals include other cloud giants and model makers, some of them partners, the annual report says 2. On 8 October the Labor Department suspended Microsoft from PERM, the first step in sponsoring foreign workers for green cards, the National News Desk reported 20. An Irish privacy fine on LinkedIn is under appeal, and Microsoft accrued $553 million for legal claims 2.

The umbrella, in words

The brands are Microsoft 365, Azure, GitHub, LinkedIn, Dynamics 365, Windows, Surface, Bing and XBOX 2. Exhibit 21 lists only the significant subsidiaries: four in Ireland, including LinkedIn Ireland, and four in the U.S., among them LinkedIn Corporation and Activision Blizzard 21.

OpenAI, invested: Microsoft holds about 25 percent on an as-converted basis and has funded $11.9 billion of $13.0 billion committed 2. OpenAI, agreed: it contracted an incremental $250 billion of Azure services, and Microsoft's revenue from OpenAI was $24.1 billion in fiscal 2026 82. Net gains on OpenAI, mostly a dilution gain from its recapitalization, added $7.6 billion to net income in the December 2025 quarter 22.

Anthropic, invested: Microsoft committed up to $5 billion in November 2025, and the S-1 says it made significant equity investments 74. Anthropic, agreed: a compute contract of at least $44.9 billion, and Claude models sold through Microsoft Foundry 4.

Control is spread out: one class of shares with one vote each, and the largest holders are Vanguard Capital Management at 7.48 percent and BlackRock at 7.30 percent 10.

Microsoft will publish first quarter results for fiscal 2027 after the market closes on Wednesday 28 October, with its call at 2:30 in the afternoon, Pacific time 5.

For that quarter the company guided to revenue of $89.85 billion to $90.95 billion, with Agents and Infra at $75.15 billion to $75.75 billion 3. It expects Azure growth of 44 to 45 percent in constant currency and capital spending of over $50 billion 3.

For the full fiscal year the finance chief said Microsoft expects double-digit growth in revenue and operating income, with operating margins down less than a point 6. She said capital spending in fiscal 2027 is expected to grow, and that calendar 2026 spending is expected to be about $175 billion 6.

From fiscal 2027 Microsoft is lengthening the expected life of its datacenters and offices from 15 to 25 years, which it says changes the timing of depreciation 6. Nadella said he expects XBOX to return to growth in fiscal 2027 6.

Anthropic's commitment to Microsoft is scheduled to start in November 2026 and run to May 2033, the S-1 says 4. Anthropic has applied to list its Class A shares on Nasdaq under the symbol ANT 4.

Under the April 2026 amendment, OpenAI keeps paying Microsoft a capped revenue share through 2030, W.Media reported, and Microsoft's licence to OpenAI's models runs through 2032, now non-exclusive 9. Microsoft's own filings say it extended the partnership in October 2025 and April 2026 23.

The annual meeting on 8 December votes on 12 directors, executive pay, the auditor and four shareholder proposals, including one to split the chair and chief executive roles 10. Reid Hoffman and Hugh Johnston are leaving the board, and John Collison is nominated 10.

Past

Microsoft's revenue grew from $97 billion in fiscal 2017 to $332 billion in fiscal 2026, up 14.7% a year, rising in 9 of 9 years and never falling from a peak; net income was positive in 10 of 10 years. Over the three fiscal years to 2026-06-30, the diluted share count shrank about 0.1% a year, and dividends and buybacks returned about 30% of operating cash flow over those three years. Dividends declared per share rose from $1.56 in fiscal 2017 to $3.64 in fiscal 2026. The filing record shows 2 warning events since 2017: material cybersecurity incidents, the latest on 2024-03-08. 12

Present

For the fiscal year ended 2026-06-30, Microsoft reported revenue of $332 billion and profit of $134 billion. Return on equity is 30%, meaning the company earned 30 cents of profit for every dollar of shareholders' money; gross profitability is 30%, meaning products earned 30 cents per dollar of everything the company owns; leverage is 42%, meaning it owes 42 cents per dollar of assets; the share count shrank 0.2% over the year. Microsoft's revenue of $332 billion in fiscal 2026 ranks in the top 1% by size in its industry family; a net margin of 40.3% ranks in the top 3%; revenue growth of 16.1% a year over the last three filed years ranks in the top 36%. The chief executive is Satya Nadella, filing under that title since 2014-09-03 for 12.1 years; the 21 officers and directors filing in the last fifteen months have been on the record a median of 8.9 years; 5 officer or director changes were reported since 2023-10-21 against 21 people in charge now. 31

Future

A quarterly report (Form 10-Q) for the quarter ending 2026-09-30 is due by 2026-11-09. An annual report (Form 10-K) for the fiscal year ending 2027-06-30 is due by 2027-08-29. Cash of $21 billion against debt of $31 billion leaves negative 1.3% of assets as net cash, bottom 19% of its family; cash from operations less capital spending is 20.2% of revenue, top 34%; gross margin is 67.9%, bottom 46%; research spending is 10.7% of revenue, bottom 18%. Revenue grew 16.1% a year over the last three filed years against 14.7% over all 10, speeding up; the newest year grew 17.8%; research spending grew 9.4% a year; capital spending grew 60.4% a year. 41

How the company operates

In fiscal 2026, revenue by line of business breaks as follows: Productivity and Business Processes 42%, Intelligent Cloud 42%, More Personal Computing 16%; by geography: United States 52%, Outside the United States 49%. Productivity and Business Processes brought $140 billion, Intelligent Cloud $138 billion, and More Personal Computing $54 billion; 2 of 3 lines grew against the year before. 31

New moves

On 8 October the Labor Department stopped processing PERM labor certifications for Microsoft, Adobe, Cognizant, Infosys, Tata Consultancy Services, Wipro, HCL and Capgemini, alleging misuse of the employer-sponsored green card process; Microsoft said 80 percent of its roughly 6,000 H-1B filings last fiscal year were for existing employees. The FTC is investigating OpenAI, Anthropic and others under the law against unfair or deceptive practices, with demands for documents and executives' testimony to follow in coming weeks; Amazon's own report shows stakes in both companies named. Six AI chiefs, including OpenAI's president, signed a White House pledge asking each company for internal controls, an internal team, an outside auditor and a board committee, carrying no date, definition, deadline or penalty. On 2026-10-18, the Guardian reported Microsoft dropped a huge AI datacentre project in Essex over power supply concerns; on 2026-10-12, CNBC reported Microsoft will rely more on homegrown AI chips, reducing dependence on Nvidia. On 2026-10-10, CNBC reported the White House blocked Microsoft from a foreign worker hiring program. 56