Microsoft (MSFT) reported its first quarter earnings after the bell Wednesday, beating Wall Street's expectations on the top and bottom lines.

Microsoft stock rose more than 4% on the news.

For the quarter, Microsoft saw earnings per share (EPS) of $4.89 on revenue of $92.28 billion. Analysts were projecting EPS of $4.73 on revenue of $90.63 billion, according to Bloomberg consensus estimates.

The company saw EPS of $4.13 and revenue of $77.6 billion in the same period last year.

Q1 marks the first quarter of Microsoft's new segment structure.

The Agents and Infra segment includes the revenue from Microsoft's Azure, Microsoft 365 cloud services, productivity and server licensing, industry solutions, and frontier and support services.

The Devices and Consumer segment includes sales tied to Microsoft's search and advertising businesses, Xbox, and Windows OEM and devices.

Agents and Infra revenue climbed to $76.8 billion, ahead of expectations of $75.6 billion, with Azure sales climbing 48% to $33.17 billion up from $22.38 billion in the same period last year.

Devices and Consumer sales totaled $15.5 billion. Wall Street was looking for $15 billion.

Capital expenditures, including leases, topped $39.37 billion, less than the $45.93 billion that analysts were anticipating.

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Microsoft's Amy Hood on debt financing Amy Hood says Microsoft will look at different ways of raising capital if it is attractive and makes sense for the company, but that it hasn't had to yet and that Microsoft feels good that it is cash flow positive.

Microsoft CFO on company's efficiency improvements Microsoft CFO Amy Hood comments on improved operational efficiencies across the company. "Efficiency is stability; it's security; it's reliability. It delivers the highest quality unit at the lowest possible cost. It's operational excellence."

Improved efficiency is helping Azure growth Microsoft says that improved engineering efficiencies have helped the company meet additional capacity needs in Azure in Q1. That, coupled with other factors, will drive Azure revenue growth of 49% to 50% year over year in Q2, according to CFO Amy Hood.

Microsoft says it will spend $170 billion on capex in fiscal 2027 Microsoft says it will spend more than $50 billion on capital expenditures in Q2 and $170 billion in fiscal 2027. Capex acceleration will be driven from CPUs and GPUs, as well as 3P capacity deliveries in the second half. Still, the company says it will remain cash flow positive in 2027.

Microsoft brought 24 data centers online in Q1 Microsoft CEO Satya Nadella says the company brought online 24 new data centers this past quarter across 5 continents and is bringing capacity online faster. He says the Windows developer is also getting more from the infrastructure it already has by optimizing across silicon, models, and software.

LinkedIn AI growth Microsoft CEO Satya Nadella says more than 10 million LinkedIn members use its AI-powered job search daily, and 25,000 customers use agentic hiring solutions. "Recruiters using a hiring assistant are finding interview-quality applicants 33% faster, while reviewing 83% fewer profiles to find qualified matches." A 3D printed logo of Microsoft is seen in front of a displayed LinkedIn logo in this illustration taken, June 13, 2016. REUTERS/Dado Ruvic/Illustration · REUTERS / REUTERS

Copilot continues to grow Microsoft CEO Satya Nadella says Copilot continues to grow. Customers with 50,000 Copilot seats increased 8x year-over-year. Daily users are also up close to 50% quarter-over-quarter, and 5x year-over-year.

Microsoft earnings call kicks off Microsoft CEO Satya Nadella and CFO Amy Hood are set to provide updates on Microsoft's Q1 results. Check back for regular updates and listen in here.

Microsoft 365 revenue up Microsoft 365 commercial cloud and Microsoft 365 consumer cloud both jumped in Q1, climbing 17%. The company attributed the growth to increased revenue per user and higher user numbers. GERMANY - 2026/06/10: In this photo illustration, the logo of productivity software Microsoft 365 is displayed on a smartphone in front of abstract background on computer screen. (Photo Illustration by Timon Schneider/SOPA Images/LightRocket via Getty Images) · SOPA Images via Getty Images

How to understand Microsoft's cloud revenue Microsoft reports revenue for Microsoft Cloud as well as Azure. Both are important metrics to watch, but they can cause confusion if you don't have a clear understanding of the difference between them. Azure is Microsoft's general cloud computing platform. It allows users to access applications and services, including Microsoft's AI platforms, from nearly any internet-connected device. Microsoft Cloud, however, refers to a broader array of services inclusive of Azure and includes Microsoft 365 commercial cloud and what the company refers to as its industry solutions cloud. Investors focus on Azure because it's where they can quickly gauge growth in Microsoft's AI revenue.

Alphabet outspends Microsoft on AI again Alphabet (GOOGL) and Microsoft (MSFT) more than doubled their quarterly spending on data centers and equipment from a year ago. Investors are treating the two bills very differently. Alphabet spent about $51 billion in the third quarter, up from $24 billion a year earlier. Microsoft spent about $39 billion, up from $19 billion, not counting leases. Both came in below Wall Street's estimates, per Bloomberg estimates. Microsoft's spending is paying off faster in the market's eyes. Azure revenue grew 48%. Alphabet burned about $9 billion in free cash flow for a second straight quarter and bought back no stock. Watch Amazon (AMZN) after Thursday's close. It's the last of the three biggest cloud companies to report this week.

Futurum CEO Daniel Newman dives into Microsoft's earnings

OpenAI now pays Microsoft more than Xbox and Windows Microsoft (MSFT) stock is climbing in extended trading after Wednesday night's results, and its quarterly filing shows how much of the business now runs through OpenAI. OpenAI paid Microsoft $10 billion in the quarter that ended in September, including revenue-sharing payments. That's about 11% of Microsoft's $92 billion in revenue, and more than its Xbox and Windows businesses brought in combined. Revenue in the quarter ended Sept. 30, 2026, US dollars · Microsoft, Bloomberg, Yahoo Finance Microsoft also owns about 24% of the ChatGPT maker. OpenAI owed it about $7 billion at the end of the quarter, up from $6 billion three months earlier. Watch whether that reliance starts to weigh on the stock. Microsoft's backlog of signed contracts stalled at about $677 billion, and new bookings fell 12% from a year earlier.

New segment reporting structure Ahead of Microsoft's earnings call, recall that the company has revamped its quarterly reporting structure, which is now divided into Agents and Infra, and Devices and Consumer. The Agents and Infra segment includes the revenue from Microsoft's Azure, Microsoft 365 cloud services, productivity and server licensing, industry solutions, and frontier and support services. The Devices and Consumer segment includes sales tied to Microsoft's search and advertising businesses, Xbox, and Windows OEM and devices.

Billions spent on AI chips Microsoft said roughly three-quarters of its $45.2 billion in capital expenditures were for "short-lived assets." That includes things like CPU and GPU chips, as well as networking equipment for data centers.

Remaining performance obligations rocket higher Microsoft's remaining commercial performance obligations, contracts that the company hasn't been paid for yet, rocketed 73% year over year in Q1 to $677 billion. That's the revenue the company will realize as it scales up AI computing capacity over time. Microsoft says the smaller historical sequential dip is a result of a large Azure commitment in the quarter. CANADA - 2026/05/18: In this photo illustration, the Microsoft Azure logo is seen displayed on a smartphone screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images) · SOPA Images via Getty Images

Microsoft's Windows and devices segment revenue drops Slowing demand for PCs and Xbox game consoles dinged Microsoft's Devices and Consumer segment in Q1. The company says Xbox hardware sales fell some 14%, while Windows OEM and devices revenue fell 22%. The XBox booth is shown at the E3 2017 Electronic Entertainment Expo in Los Angeles, California, U.S. June 13, 2017. REUTERS/ Mike Blake · REUTERS / Reuters Xbox console and PC prices have ballooned due to the ongoing memory and storage shortage. Microsoft, however, also attributes the PC declines to difficult comparisons versus last year, when the company was ending support for Windows 10, forcing enterprise customers to buy new PCs during the period.

Microsoft's Nadella on Q1 results "We are delivering greater capability, choice, control, and cost efficiency for customers across our entire stack," Microsoft CEO Satya Nadella said in a prepared statement. "By helping organizations build and own their own intelligence, and earning trust through agent safety and security, we are translating our innovation into growing adoption and real-world impact across every industry." 25 February 2026, Bavaria, Munich: Satya Nadella, CEO of Microsoft, speaks on stage during the Microsoft AI Tour. The company will be presenting new AI applications as part of a keynote speech. Photo: Sven Hoppe/dpa (Photo by Sven Hoppe/picture alliance via Getty Images) · picture alliance via Getty Images

The AI trade is back, and it's sorting software stocks into winners and losers October was the month investors gave this year's beaten-down software stocks a second chance. Four sessions later, they're taking it back and buying cybersecurity instead. For most of October, the trade was easy to spot: Sell chips, buy software. Through the Oct. 22 close, the median stock in a 45-stock Yahoo Finance software basket was up about 13% for the month, while the iShares Semiconductor ETF (SOXX) had lost about 16%. Then the trade flipped. Since that close, SOXX has jumped about 7%, and the First Trust Nasdaq Cybersecurity ETF (CIBR) has gained about as much, while 26 of the 45 software stocks fell through Tuesday. Change since the Oct. 22 close through Oct. 27, %. In parentheses: change from Sept. 30 to Oct. 22 · Yahoo Finance Since the Oct. 22 close, the 20 chip stocks in the S&P 500 (^GSPC) have added nearly $570 billion in market value, according to Yahoo Finance calculations through Tuesday. The rest of the index lost about $40 billion. "For now, early trading this week looks more like rotation within AI than a broad return of conviction," Vanda Research's Viraj Patel wrote Wednesday. Software isn't breaking down. The equal-weight SPDR S&P Software & Services ETF (XSW) closed at a record on Monday. Microsoft (MSFT), the biggest software name by market cap, reports after Wednesday's close. If its AI business keeps growing, the list of winners could get longer. Read more.

Decoding Microsoft's AI workforce shake-up: Are more layoffs coming? Yahoo Finance Executive Editor Brian Sozzi takes a closer look at Microsoft's (MSFT) employee buyouts on Sozzi Unleashed, examining the role of artificial intelligence in the tech giant's evolving workforce strategy. Sozzi breaks down what's driving the changes, how AI could reshape Microsoft's staffing needs, and whether another round of layoffs could be on the horizon.