Microsoft's Latest Quarter: Cloud Sales Climb, Windows Hardware Slides
Microsoft reported $92.3 billion in revenue and $33.6 billion in net income for its first fiscal quarter of 2027. The results were released on October 28, 2026. Revenue, which is the total money coming in from sales, rose 19 percent from a year earlier. Net income, which is the profit left after costs are paid, rose 32 percent, according to The Verge. The company had scheduled its earnings conference call for 2:30 PM PT that day, per its Investor Relations listing.
This quarter is the first one reported under a new way of grouping the business. Think of it like a supermarket that stops sorting its goods into many small departments and instead uses two large sections. Microsoft retired its three earlier groups, Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. It now reports two: Agents and Infra, and Devices and Consumer.
Agents and Infra includes Azure, Microsoft 365 for businesses and consumers, and server products. Azure is Microsoft's cloud service, which rents computing power and storage to customers over the internet. This group brought in $76.8 billion, or 83 percent of total revenue, and grew 25 percent from a year earlier. Azure alone brought in $33.17 billion, up 48 percent. Microsoft said it will report Azure revenue every quarter from now on. CNBC reported that the company planned to start giving that figure in dollars with this report.
Devices and Consumer covers Windows, Xbox, Surface, and the search and advertising businesses. It brought in $15.5 billion, or 17 percent of revenue, down 3 percent. Its parts did not move in the same direction. Windows OEM and devices revenue fell 22 percent. OEM refers to the companies that build computers and sell them with Windows already installed. Xbox hardware revenue fell 14 percent, and Xbox content and services revenue fell 2 percent.
Revenue came in above expectations. Analysts' average forecast before the release, as cited by CNBC, was $90.69 billion in revenue and $4.73 in adjusted earnings per share, which is profit per share of stock. Reuters had reported in July that Microsoft's own forecast for this quarter had a midpoint of $90.4 billion. That was above the analysts' average of $89.66 billion at the time. The reported $92.3 billion is higher than both of those figures.
The broader context here is that the reorganization puts Azure in the same reporting group as Microsoft 365 and server products. It places Windows, Xbox, and advertising in a separate group. Investors and analysts used to have to estimate cloud growth from a larger total. Now they receive a dedicated Azure figure each quarter. The trade-off is that older numbers will not line up neatly with the new groups. Comparisons over the coming quarters will depend on the restated figures that Microsoft provides.
In my view, the most useful way to read the Devices and Consumer numbers is to notice that the declines sit in the hardware lines, while the group as a whole fell only 3 percent. The 22 percent drop in Windows OEM revenue will likely draw the most attention from people who track PC production, because it is closest to how many machines are being sold. Dollar figures alone cannot show how much of a change came from prices, how many units sold, or which products sold. The direction of this group will be easier to judge once the company's comments on those drivers are available.
For developers and businesses that buy Microsoft's services, the change offers a clearer view of where the company's infrastructure revenue comes from. A quarterly Azure figure in dollars gives a steady growth series to compare against capacity announcements and customer commitments. In my view, that is a real gain in visibility. It is the kind of change that tends to matter more across several reports than in any single quarter.
