FX Impact

FY 2026

N/A

Assuming current rates remain stable, FX is expected to increase full year revenue growth and COGS growth by approximately two points and to increase operating expense growth by one point "

no prior guidance

Revenue and Operating Income Growth

FY 2026

N/A

Expected to deliver another year of double-digit revenue and operating income growth "

no prior guidance

Capital Expenditure Growth

FY 2026

N/A

Growth will moderate compared to FY 2025 with a greater mix of short-lived assets; growth rates in H1 will be higher than in H2 due to timing of delivery of additional capacity "

no prior guidance

Operating Margins

FY 2026

N/A

Expected to be relatively unchanged year over year "

no prior guidance

Effective Tax Rate

FY 2026

N/A

Expected to be between 19-20% "

no prior guidance

FX Impact

Q1 FY 2026

N/A

Expected to increase total revenue growth by two points. Within segments, FX is expected to increase revenue growth by roughly three points in Productivity and Business Processes and roughly one point in Intelligent Cloud and More Personal Computing; FX is expected to increase COGS and operating expense growth by roughly one point "

no prior guidance

Commercial Bookings

Q1 FY 2026

N/A

Expected healthy growth driven by strong execution across core annuity sales motions and long-term commitments to the platform "

no prior guidance

Microsoft Cloud Gross Margin Percentage

Q1 FY 2026

N/A

Expected to be roughly 67%, down year over year due to scaling AI infrastructure "

no prior guidance

Capital Expenditures

Q1 FY 2026

N/A

Expected to be over $30 billion driven by strong demand signals "

no prior guidance

Productivity and Business Processes Revenue

Q1 FY 2026

N/A

Expected revenue of $32.2 billion to $32.5 billion, or growth of 14% to 15% with roughly three points of benefit from FX "

no prior guidance

Intelligent Cloud Revenue

Q1 FY 2026

N/A

Expected revenue of $30.1 billion to $30.4 billion, or growth of 25% to 26% with roughly one point of benefit from FX "

no prior guidance

More Personal Computing Revenue

Q1 FY 2026

N/A

Expected revenue of $12.4 billion to $12.9 billion "

no prior guidance

COGS

Q1 FY 2026

N/A

Expected to be $24.3 billion to $24.5 billion, or growth of 21% to 22% "

no prior guidance

Operating Expense

Q1 FY 2026

N/A

Expected to be $15.7 billion to $15.8 billion, or growth of 5% to 6% "

no prior guidance

Other Income and Expense

Q1 FY 2026

N/A

Estimated to be negative $1.3 billion "

no prior guidance

Effective Tax Rate

Q1 FY 2026

N/A

Expected to be between 19-20% "

no prior guidance

Cloud Migrations

Mentioned consistently across Q1–Q3 with references to steady progress in migrating workloads, including traditional SQL, Windows Server migrations and major enterprise projects " " "

Highlighted in Q4 2025 as one of the largest and most successful migrations (e.g. Nestle migrating over 200 SAP instances, 10,000 servers, and 1.2 petabytes of data) " "

Consistent focus with growing scale and increasingly impressive examples, underscoring its role as a key growth driver. " " " " "

Generative AI Integrations

Consistently discussed in Q1–Q3 earnings calls with emphasis on integration across platforms, boosting usage (e.g. integrations in Power Platform and AI app factories) " " " "

In Q4 2025, emphasized with deep integrations across platforms including the launch of new AI products and advanced capabilities via Azure AI Foundry and model integrations " "

Steady momentum with enhanced scope and scale, indicating robust investment and expanding AI capabilities. " " " " "

Microsoft 365 Copilot Expansion

Widely noted from Q1 through Q3 for rapid adoption and expansion (e.g. doubling/tripling daily usage, large enterprise deals, and innovative agent integrations) " " " "

Q4 2025 highlights record adoption with over 100 million monthly active users and significant new features (group-level agents, third-party integrations) " " "

Sustained acceleration with consistently positive sentiment as usage scales and innovative features emerge. " " " " " " "

OpenAI Partnership & Strategic AI Leadership

Addressed in Q1–Q3 with emphasis on the mutually beneficial relationship, integration of cutting-edge models into Microsoft’s platform, and early strategic investments resulting in a strong leadership position " " " "

Q4 2025 reiterates the partnership’s central role in enabling state-of-the-art model access and underpinning broad AI innovation, with a continued focus on building a comprehensive AI tech stack " "

Stable and foundational – a core pillar driving AI innovation while remaining integral to Microsoft’s long‐term strategy. " " " " " "

High Capital Expenditures & Execution Risks

Regularly discussed in Q1–Q3 regarding necessary investments for scaling AI and cloud infrastructure, with challenges noted in balancing spend and managing margin pressures " " " "

In Q4 2025, reported very high CapEx (e.g. $24.2B, including finance leases) along with acknowledged execution risks, mitigated through software optimizations that helped expand margins " " " "

Continued high spending with cautious optimism – execution challenges remain but are being offset by efficiency gains and strong revenue growth. " " " " " " "

Infrastructure Capacity Constraints

Consistently highlighted in Q1–Q3, noting challenges with data center build-outs, power/space limitations and supply delays affecting short-term capacity " " " " " "

Q4 2025 still sees capacity constraints despite new data center additions; software optimizations and significant investments are noted, though power and supply issues persist " "

Persistently challenging – capacity constraints remain a focus, with ongoing investments and adjustments aimed at mitigating short-term supply issues. " " " " " " " "

Operational Efficiency & Margin Expansion

Across Q1–Q3, efforts emphasized improving margins via cost management, software innovations, and better capital efficiency despite transitioning investments in AI infrastructure " " "

Q4 2025 reports margin expansion (operating margins up by 2 points to 45%) even with heavy CapEx, driven by software innovations and sustained efficiency improvements " " "

Positive trend – operational efficiencies continue to improve margins despite high investment, reflecting effective cost optimizations and technological enhancements. " " " " "

Evolving AI Monetization Uncertainties

Not explicitly addressed in Q1–Q3 earnings calls, with discussions focusing more on rapid AI business growth and infrastructure scaling " " "

Q4 2025 introduces discussion of evolving pricing models with a mix of per-user and consumption-based approaches, highlighting uncertainties but balanced by expanding usage and product innovation "

Emerging topic – new uncertainties are being acknowledged in Q4 regarding pricing strategy, though the sentiment remains cautiously optimistic amid growth in usage. "

Contracted Backlog & Sustained Demand

Consistently emphasized across Q1–Q3 with strong RPO figures and significant multi-year customer commitments driving future revenue (e.g. $259B in Q1, $315B in Q3) " " " " "

Q4 2025 showcases a massive contracted backlog ($368B) with sustained demand for cloud and AI services, reinforcing long-term revenue visibility "

Highly positive – continued growth in contracted backlog and strong demand support a robust revenue outlook and validate ongoing strategic investments. " " " " "

Non-AI Services Execution Challenges

Q1 noted non-AI Azure growth was in line with expectations, while Q2 and Q3 observed some execution challenges in scale motions and indirect sales efforts impacting traditional offerings " " " "

Q4 2025 earnings calls do not mention significant issues with non-AI services, suggesting decreased focus on these challenges as attention shifts more fully to AI-driven growth [–]

Diminishing emphasis – earlier challenges in scale motions for non-AI services appear to have been addressed or overshadowed by the strong performance of AI and cloud initiatives. " " " "