Microsoft Q1 Earnings: Azure & AI Propel Revenue to $77.7B

Microsoft reported its Q1 FY2026 results show revenue of $77.7 billion, up 18% year on year, with operating income of $38 billion, up 24%. It noted a $3.1 billion loss tied to its OpenAI investment, even as net income rose by 12%. Using equity accounting, Microsoft suggested OpenAI may have posted losses of up to $11.5 billion for the quarter ending 30 September, based on Microsoft’s 27% ownership and proportional loss; OpenAI has not commented on these figures.

The period also reflected Microsoft’s OpenAI restructuring into a Public Benefit Corporation, with Microsoft holding 27% ownership in the new entity valued at about $135 billion, implying a market valuation around $500 billion for OpenAI’s for‑profit division.

Cloud services remained the growth driver, with Microsoft Cloud at $49.1 billion (up 26%), Intelligent Cloud at $30.9 billion (up 28%, Azure and other cloud services up 40%), Productivity and Business Processes at $33.0 billion (up 17%), and More Personal Computing at $13.8 billion (up 4%). The company returned $10.7 billion to shareholders through dividends and buybacks during the quarter.