Microsoft Posts Record Quarter, Cuts 2026 Capex Outlook by $5 Billion
Azure revenue reached $33.17 billion, beating estimates, while capital expenditure of $45.2 billion came in below the $50.7 billion market forecast.
Microsoft reported fiscal 2027 first-quarter results for July–September 2026 on October 28, posting revenue of $92.28 billion, up 19% year on year and above the $90.62 billion market estimate, according to aitimes.com. Net income was $36.63 billion, up 32% from $27.75 billion a year earlier, and adjusted earnings per share came in at $4.89 versus an expected $4.72.
It was the tenth consecutive quarter of record revenue for the company. Cloud revenue rose 30% year on year to $63.9 billion, with Azure contributing $33.17 billion against an estimate of $32.84 billion.
The company also lowered its calendar 2026 capital expenditure outlook to $170 billion from $175 billion, citing delays in external GPU infrastructure supply. First-quarter capital expenditure including finance leases was $45.2 billion, below the $50.7 billion market estimate.
Revenue from Microsoft's commercial agreement with OpenAI reached $10 billion in the quarter, about 11% of total quarterly revenue. For the fiscal second quarter, Microsoft guided Azure growth at 49–50% and total revenue at $96–97.1 billion.
Neocloud partners slip after hours
Microsoft has secured GPU-based computing from external providers including CoreWeave and Nebius to meet AI demand, and has signed a computing contract with Nebius worth close to $20 billion. Neocloud companies have raised large amounts of capital for data center buildouts and GPU purchases and are exposed to rising interest rates and borrowing costs. After the results, CoreWeave and Nebius shares fell about 5% and IREN about 3% in after-hours trading.
Quick answers
What were Microsoft's fiscal 2027 first-quarter revenue and net income?
Revenue was $92.28 billion, up 19% year on year, and net income was $36.63 billion, up 32% from $27.75 billion a year earlier.
Why did Microsoft cut its 2026 capital expenditure outlook?
The company lowered its calendar 2026 capex outlook to $170 billion from $175 billion, citing delays in external GPU infrastructure supply.
What guidance did Microsoft give for the fiscal second quarter?
Microsoft guided Azure growth at 49–50% and total revenue at $96–97.1 billion.