Microsoft Posts $82.9 Billion Q3 Revenue as AI Business Tops $37 Billion Run Rate
Updated
Updated · Zacks Investment Research · Jun 1
Microsoft Posts $82.9 Billion Q3 Revenue as AI Business Tops $37 Billion Run Rate
2 articles · Updated · Zacks Investment Research · Jun 1
$82.9 billion in fiscal third-quarter revenue marked 18% growth for Microsoft, while net income rose 23% to $31.8 billion and diluted EPS reached $4.27.
$34.7 billion from Intelligent Cloud drove the quarter, with Azure and other cloud services up 40%, Microsoft Cloud revenue up 29% to $54.5 billion, and commercial backlog nearly doubling to $627 billion.
$37 billion in annualized AI revenue underscored the momentum: Microsoft said the business grew 123% year over year and Microsoft 365 Copilot paid seats surpassed 20 million.
$86.7 billion to $87.8 billion in fourth-quarter revenue guidance points to continued double-digit growth, but Microsoft expects quarterly capex to exceed $40 billion and calendar 2026 capex to reach about $190 billion.
66% cloud gross margin and a 1% decline in More Personal Computing highlighted the trade-off from the AI buildout, with Microsoft saying it still faces supply constraints even as it accelerates GPU, CPU and storage capacity.
With AI costs soaring and margins falling, can Microsoft's infrastructure bet deliver returns before its hardware becomes obsolete?
Microsoft is pushing an 'agentic computing era,' but are businesses prepared for the security and governance risks of autonomous AI agents?
As AI data centers strain global power grids, can 'green' tech outpace the environmental damage from this unprecedented industrial buildout?
Microsoft Q3 2026 Financials: AI Revenue Surges Past $37B, Capex Hits Record Highs, and OpenAI Deal Reshapes Margins
Overview
Microsoft achieved strong financial results in Q3 2026, with total revenue reaching $82.9 billion, a 15% year-on-year increase. This growth was driven by the rapid expansion of its AI initiatives, which have more than doubled their annual revenue run rate. Operating income rose 16% to $38.4 billion, and net income jumped 23% to $31.8 billion. The company’s robust top-line growth and operational efficiency highlight the success of its AI strategy, positioning Microsoft for continued momentum as it invests heavily in AI infrastructure and scales its cloud and productivity offerings.