Microsoft Q3 Earnings: Revenue Up 19% Year-over-Year, Beating Market Expectations, Azure Cloud Business Grows 48%

BlockBeats news, October 29 — Microsoft released its fiscal third-quarter 2026 earnings report (quarter ended September 30) in the early hours of today Beijing time. The company reported quarterly revenue of $92.3 billion, up 19% year-over-year and above Wall Street expectations; adjusted earnings per share came in at $4.89, also beating market expectations. Net income rose 32% year-over-year to $36.6 billion on a GAAP basis, while operating income grew 21% year-over-year to $45.9 billion. Overall results beat expectations.

Cloud was the core growth engine this quarter. Microsoft Cloud revenue reached $63.9 billion, up 30% year-over-year. Among that, Azure cloud platform revenue was $33.17 billion, up 48% year-over-year, marking the first time the company disclosed Azure revenue in absolute dollar terms. The Agents and Infra segment (covering Azure, Microsoft 365 Commercial, and server products, among others) posted revenue of $76.8 billion, up 25% year-over-year, accounting for roughly 83% of total revenue. The Devices and Consumer segment generated $15.5 billion in revenue, down 3% year-over-year.

Commercial remaining performance obligation (RPO) grew 73% to $677 billion, providing support for future revenue. Microsoft 365 Commercial cloud revenue grew approximately 17% to 18%, and search and advertising revenue (excluding traffic acquisition costs) rose 12% year-over-year. Consumer and device-related businesses showed relative weakness, with Windows OEM and devices revenue declining notably and Xbox content and services revenue slipping slightly.

Profitability remained solid. Operating margin held at a high level, with core business operating efficiency strong. The company continued capital expenditures to support AI and cloud infrastructure, with capex of approximately $45.2 billion for the quarter, below some prior market expectations. Free cash flow, while down year-over-year, remained positive. The company guided next-quarter revenue to $96 billion to $97.1 billion, also above analyst expectations, and expects Azure growth to potentially accelerate further to 49% to 50%.

Following the earnings release, Microsoft shares rose about 4% in after-hours trading. The market views the company as having delivered revenue and profit above expectations despite heavy AI investment, with cloud business growth accelerating, somewhat easing concerns about returns on capital expenditure among tech giants.

Overall, Microsoft extended the strong momentum of its cloud business this quarter, with Azure growth particularly standout, and results broadly exceeded market expectations, showing that AI and cloud investments have at this stage translated into relatively clear revenue growth.