Microsoft It reported strong growth in its cloud and AI businesses while also mitigating the impact of capital expenditures.
The company said on Wednesday (July 29) Earnings release During the quarter ended June 30, Intelligent Cloud revenue increased 32% year over year to $39.3 billion, Productivity and Business Operations revenue rose 14% year over year to $37.8 billion, and More Personal Computing revenue decreased 4% year over year to $12.9 billion.
Overall, Microsoft’s revenue rose 18% year over year to $90.0 billion, according to the release.
Chairman and CEO of Microsoft Satya Nadella Customer confidence in Microsoft’s AI offerings was reflected in Azure revenue surpassing $100 billion for the first time and Microsoft 365 Copilot surpassing 30 million paid seats, he said in the earnings release.
During Wednesday Earnings callNet seating in Microsoft 365 Copilot more than doubled quarter-on-quarter, the number of conversations per user nearly doubled year-over-year, and the number of customers with more than 5,000 seats increased seven-fold year-on-year, Nadella said.
“NHS England, for example, is rolling out Copilot to 505,000 doctors and staff, the largest healthcare deployment of its kind, after trial showed it saved staff an average of 43 minutes a day,” Nadella said during the call.
Microsoft’s capital expenditures rose 70% year-over-year to $41.0 billion during the fourth quarter, according to its fiscal 2026 fourth-quarter results. Presentation Released Wednesday.
The presentation attributed this increase to support from customer demand for Microsoft’s cloud and artificial intelligence offerings as well as the impact of higher component prices.
Microsoft’s capital expenditures forecast for calendar year 2026 remains unchanged at approximately $175 billion, while those for all of fiscal year 2027 are expected to grow year-on-year, according to the first-quarter fiscal year 2027 outlook. Presentation Released Wednesday.
The forecast presentation stated that the forecast for the calendar year 2026 includes the impact of changing the useful life on the classification of future lease contracts.
Microsoft Executive Vice President and Chief Financial Officer Amy Hood Starting at the start of fiscal 2027, the company will extend the estimated useful life of its data centers and office buildings from 15 years to 25 years, he said during the earnings call.
“The biggest impact will be on capital expenditures as more of our future data center leases will convert from finance leases to operating leases,” Hood said. “As a result of this update, finance leases are included in capital expenditures while operating leases are not. Beyond this useful life effect, our forecast for capital investments for calendar year 2026 remains unchanged. However, the shift from finance to operating leases adjusts our forecast to approximately $175 billion.”
Looking ahead, Microsoft expects its total revenue to see double-digit growth through the entire fiscal year 2027, according to the forecast presentation.
