Microsoft posts $92.3 billion Q1 revenue as cloud and Azure drive strong growth
Azure revenue hit $33.17 billion, up 48% year over year, as Microsoft’s new Agents and Infra segment generated 83% of quarterly sales. Overall revenue rose 19% to $92.3 billion, while Windows OEM and devices fell 22% amid a 20% PC-market decline.
Microsoft reported $92.3 billion in revenue and $33.6 billion in net income for the first quarter of its fiscal year 2027, announced on October 28, 2026. Revenue grew 19 percent year-over-year, while net income rose 32 percent.
Alongside the results, Microsoft restructured how it reports its finances, replacing its three previous business segments with two new ones: Agents and Infra, and Devices and Consumer. Agents and Infra — covering Azure, Microsoft 365 commercial and consumer, and server products — accounted for 83 percent of total revenue at $76.8 billion, up 25 percent year-over-year. For the first time, Microsoft also began disclosing Azure revenue on a quarterly basis; Azure brought in $33.17 billion this quarter, up 48 percent year-over-year. Microsoft Cloud revenue overall reached $63.9 billion, up 30 percent, representing nearly 70 percent of total company revenue.
Devices and Consumer — which includes Windows, Xbox, Surface, and search and advertising — contributed $15.5 billion, or 17 percent of total revenue, a decrease of three percent. Windows OEM and devices revenue fell 22 percent year-over-year, which Microsoft attributed to the prior year’s Windows 10 end-of-support benefit, OEM inventory drawdowns, and a weaker PC market impacted by what the source describes as a “RAMageddon” crisis that pushed the overall PC market down 20 percent. CFO Amy Hood said she expects Windows OEM revenue to decline again next quarter by around “the mid 30s,” with further declines expected throughout fiscal year 2027.
Xbox hardware revenue declined 14 percent year-over-year, and Xbox content and services — including Game Pass — fell 2 percent. Microsoft has not updated Game Pass subscriber figures since reporting 34 million subscribers more than two years ago. Xbox CEO Asha Sharma noted that PC platform revenue grew in double digits and that console supply remains constrained. Hood expects Xbox content and services revenue to grow in the “mid to high single digits” next quarter.
CEO Satya Nadella described Microsoft’s strategy to run AI models locally on PCs and said the company aims to deliver AI capabilities comparable to leading models within three to six months of their release “at a fraction of the training cost.”