$MSFT · MICROSOFT CORP
Microsoft filed its Q1 FY2027 10-Q, reporting revenue of $92.279B (+18.8% YoY), operating income of $45.915B (+21%), and diluted EPS of $4.92 (+32%). Azure led with 48% revenue growth to $33.2B. The company introduced a new segment structure: Agents and Infra ($76.8B revenue, $40.6B operating income) and Devices and Consumer ($15.5B revenue, $5.4B operating income). Microsoft Cloud revenue reached $63.9B. CapEx nearly doubled to $39.4B as AI infrastructure investment accelerates.
- Revenue of $92.279B, up 18.8% YoY, with service revenue jumping to $77.6B from $61.8B.
- Azure revenue surged 48% YoY to $33.2B, driving the Agents and Infra segment to 25% revenue growth.
- Operating income rose 21% to $45.9B; operating margin reached 49.8%.
- Net income hit $36.6B ($4.92 diluted EPS), up 32% YoY, aided by a $207M OpenAI investment gain vs. a $3.1B loss last year.
- Microsoft Cloud revenue reached $63.9B, up from $49.1B a year ago, encompassing Azure, M365 commercial cloud, and Industry solutions.
Extended-hours trading shows MSFT at $556.13, up 4.73% from the regular close of $531.01, adding roughly $186B in market cap on a $3.94T base. The after-hours surge reflects strong Azure acceleration and margin expansion.
Microsoft's Azure re-acceleration to 48% growth and 49.8% operating margin defy the law of large numbers at $3.9T market cap, validating the AI infrastructure thesis at massive scale.
Microsoft's 48% Azure growth and $63.9B cloud revenue reinforce its position as the hyperscale leader in AI-driven cloud, pulling further ahead of AWS and Google Cloud. The new "Agents and Infra" segment structure signals a strategic pivot to monetize AI agents atop Azure infrastructure.
Cost of revenue grew 24% YoY to $29.7B, outpacing the 19% revenue growth, driven by Azure infrastructure scaling. CapEx surged to $39.4B in the quarter (vs. $19.4B last year), reflecting massive AI infrastructure buildout that could pressure future margins if cloud demand moderates.