Cloud expansion gathers pace according to Microsoft's latest report
Microsoft Projects Double-Digit Revenue Growth for Fiscal 2026
Microsoft has announced its plans for the upcoming fiscal year, with a focus on continued investment in AI and data centers. The tech giant's strong momentum, driven by its cloud and AI business, particularly Azure, is expected to fuel double-digit revenue growth in 2026, according to the company's forecast.
The fourth quarter of 2025 saw Microsoft's net cash from operations surge by 15% to $42.6 billion, and for the full fiscal year, the company's revenue grew by 15% and operating income grew by 17%. These figures highlight the robust health of Microsoft's portfolio.
Microsoft's cloud and AI business has been a major growth driver, with Azure cloud infrastructure revenue rising 34% in fiscal 2025. This contributed significantly to Microsoft's cloud revenue of $46.7 billion, up 27% year-over-year. The company's CEO, Satya Nadella, has emphasised the role of Cloud and AI as the driving force of business transformation.
While specific details on capital expenditure (capex) spending for AI and data centers in fiscal 2026 were not explicitly disclosed, such investments are generally understood to be substantial given Azure's expansion and Microsoft’s focus on AI innovation.
The overall strength of Microsoft's portfolio was evident in these results, despite some vulnerabilities to economic headwinds and tariffs. The fiscal fourth-quarter revenue for 2025 was $76.4 billion, a 18% increase from the previous year. Productivity and business processes revenue for the same quarter grew by 16% due to growth in Microsoft 365 commercial and consumer products.
Microsoft's earnings per share for the fiscal fourth-quarter of 2025 were $3.65, a 24% increase from the previous year. The company returned $9.4 billion to shareholders in the form of dividends and share repurchases during the quarter.
The Intelligent Cloud revenue for the fiscal fourth-quarter of 2025 was $29.9 billion, a 26% increase from the previous year. Microsoft's Azure cloud business surpassed $75 billion in sales for the entire fiscal year 2025, a 34% increase from fiscal 2024. The company ended the fourth-quarter of 2025 with $94.6 billion in cash and short-term investments on its balance sheet.
Microsoft's shares jumped 6% in after-market trading following the earnings release but ahead of the company's call with shareholders. Investors will be eager to hear forecasts about whether the growth rate can continue into fiscal 2026.
Investors are understandably excited about the company's potential to continue to convert that potential into profits. The results and new details of Azure are a big step in justifying that outsized expenditure. Microsoft and its big-tech rivals are in the early stages of turning their massive investments in cloud and AI into profits.
[1] Microsoft Investor Relations. (2026, February 2). Microsoft Corporation Reports Fourth Quarter and Fiscal Year 2025 Results. [Press release] [2] Microsoft Corporation. (2026, February 2). Microsoft Corporation Reports Fourth Quarter and Fiscal Year 2025 Results. [Press release] [3] Microsoft Corporation. (2026, February 2). Microsoft Corporation Reports Fourth Quarter and Fiscal Year 2025 Results. [Webcast]
- Microsoft's significant revenue growth in 2026, as predicted by the company, is partly due to its continuous investment in AI and finance, focusing on its cloud and AI business, particularly Azure.
- The technology sector plays a crucial role in Microsoft's growth strategy, with a substantial portion of its finances being allocated towards AI and technology innovations, as evidenced by its continued expansion in these areas.
- The business transformation at Microsoft is driven by its focus on Cloud and AI, particularly Azure, which has become a major income generator for the company, contributing to both its business success and its potential for future financial growth.
