Microsoft will restructure its financial reporting around AI starting in fiscal 2027
Microsoft will restructure its financial reporting into two segments — Agents and Infra, and Devices and Consumer — beginning with its first-quarter fiscal 2027 earnings call in late October (The Verge). The change replaces the three-segment structure Microsoft has used for years: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing.
The new reporting lines are designed to reflect how AI has reshaped Microsoft's operations. CEO Satya Nadella said AI "represents a profound shift in both technology and business that is changing what Microsoft builds and how it operates" (The Verge). Microsoft had already scheduled a "Fiscal Year 2027 Segments and Investor Metrics" presentation for September 2, 2026, ahead of the October earnings call (Microsoft Investor Relations).
The Agents and Infra segment will house Azure, Microsoft 365 Cloud, Microsoft 365 commercial and consumer, server products, industry solutions, and what Microsoft calls frontier and support services. The Devices and Consumer segment will include LinkedIn search and advertising revenues, Xbox division revenue, and Windows OEM and devices revenue (The Verge).
Critically for investors and competitors, Microsoft will disclose quarterly revenue for Azure for the first time under the new structure. The company only began reporting Azure revenue at all last year, having previously provided year-over-year growth rates without an absolute dollar figure (The Verge). Azure revenue will also be redefined: GitHub cloud and other developer cloud services, along with Security Copilot and Healthcare and Life Sciences cloud revenues, will move out of the Azure line under the new segmentation (The Verge).
The reporting overhaul arrives on the heels of a strong fiscal 2026. Microsoft's Q4 FY2026 revenue was $90.0 billion, up 18%, with net income of $35.8 billion. The earnings release was titled "Microsoft Cloud and AI Strength Fuels Fourth Quarter Results." Azure revenue surpassed $100 billion in that quarter, and Microsoft Cloud revenue reached $59.3 billion, up 27% (Microsoft Investor Relations). In the prior quarter, Intelligent Cloud segment revenue grew $7.9 billion, or 30%, with server products and cloud services revenue up $7.8 billion, or 32%, driven by Azure and other cloud services (Microsoft Investor Relations). Microsoft's fiscal 2025 annual report showed a $36.6 billion revenue increase, or 15%, alongside a cost-of-revenue increase of $10.6 billion, or 36%, driven by Azure (Microsoft FY2025 Annual Report).
For calendar 2025, Reuters reports Azure had sales of $85.8 billion over the comparable four-quarter period, versus AWS's $128.7 billion (Reuters). The new quarterly disclosure will give the market a more granular view of how that gap is evolving.
The broader context here is that Microsoft has a track record of resegmenting when the gap between how it operates internally and how it reports externally becomes untenable. In July 2006, the company announced it would move from its existing reporting structure to five operating segments in fiscal 2007 (Microsoft News). That reshuffle coincided with the platform shifts of the era — the move to cloud services was nascent, Windows Vista was imminent, and the company was reorganizing around how customers consumed software rather than how it packaged software for sale. The parallel is not exact, but the pattern is consistent.
The redefinition of Azure's boundaries is the detail that matters most. By removing GitHub cloud, Security Copilot, and Healthcare and Life Sciences cloud from the Azure revenue line, Microsoft is tightening what counts as Azure — think of it as redrawing the borders of a city to exclude some suburbs. Investors who have been modeling Azure growth against an older, broader definition will need to recalibrate once the new segmentation takes effect. Whether the narrower definition makes Azure look faster-growing or slower depends entirely on the relative growth rates of the services being carved out, and Microsoft has not yet provided a restated historical baseline for comparison.
The two-segment split also collapses the old boundary between productivity and infrastructure. Microsoft 365 commercial, Microsoft 365 consumer, server products, and Azure will all sit in Agents and Infra — a grouping that frames Microsoft's commercial business as a unified AI-and-cloud stack rather than a collection of product categories. Devices and Consumer becomes the catch-all for the businesses that are not part of that stack: Xbox, Windows OEM, LinkedIn advertising. For a company whose FY2026 Q4 press release led with "Cloud and AI Strength," the new structure makes that framing architectural rather than rhetorical. Investors will see the first results under the new segments in late October.
