Microsoft Cloud Revenue Reaches $63.9 Billion as Azure Grows 48%
Microsoft Cloud revenue reached $63.9 billion in the fiscal first quarter of 2027, up 30% from a year earlier, or 31% in constant currency, according to Microsoft's earnings release. Azure, the company's cloud infrastructure and platform business, grew 48% over the same period.
Constant-currency growth strips out exchange-rate movements. The one-point gap between the reported and constant-currency rates means currency translation trimmed the headline figure slightly. The gap was wider a year earlier. In the third quarter of fiscal 2026, Microsoft Cloud revenue of $54.5 billion grew 29%, or 25% in constant currency, a four-point difference. Taken together, the two periods suggest the currency drag has eased, though the headline growth rate is what most investors will model against.
Sequentially, the quarter's revenue was $4.6 billion above the $59.3 billion Microsoft reported for the fourth quarter of fiscal 2026, when segment growth was 27%. That is the more useful yardstick for anyone tracking the run rate, because it strips out the year-earlier base and shows how much the business added in a single quarter.
The forward number matters more to the market than the trailing one. Microsoft said it expects Azure growth of 49% to 50% in the second quarter, according to Reuters. Reuters also reported that analysts had estimated second-quarter Azure growth of 47.6%, based on Visible Alpha data. The guided range sits 1.4 to 2.4 percentage points above that consensus. For a segment this large, a gap of that size translates into a meaningful difference in forecast revenue, and it is the number analysts will revise toward first.
Backlog is the other figure worth watching. In its fourth-quarter fiscal 2026 report, Microsoft said its commercial remaining performance obligation, meaning contracted revenue not yet recognized, rose 84% to $678 billion. A backlog growing far faster than recognized revenue gives visibility into future quarters. It also carries a caveat: contracted revenue is not the same as recognized revenue, and timing depends on how quickly capacity comes online and customers draw it down. The backlog figure is the reason the Azure guidance carries weight, because it is the evidence that the growth rate has contracted demand behind it.
The stakes for the stock are visible in July. Reuters reported that Microsoft shares soared more than 15% in late July, their biggest one-day percentage gain in 18 years, after a forecast that the market judged stellar. That reaction illustrates how heavily the stock can price in forward cloud guidance. A beat on the trailing quarter is largely known by the time it is reported, while a guided growth rate above consensus shifts expectations for several quarters at once.
For readers who work with these numbers daily, the practical question is whether the second-quarter guidance holds and whether the backlog converts into recognized revenue at the pace the 84% growth rate implies. Both can be checked against future reports. Neither can be settled from a single quarter.
