Microsoft reported fiscal third-quarter results after Thursday's close that decisively topped Wall Street expectations, with Azure cloud revenue growth of 42% year-over-year, total revenue of $76.4 billion, and earnings per share of $4.38 versus consensus of $4.12. The results sent Microsoft shares 6.8% higher in extended-hours trading and to a record $584 per share by Friday's premarket open.
CEO Satya Nadella highlighted that AI-related Azure consumption now contributes approximately 32% of total Azure revenue, up from 22% a year earlier. The Azure OpenAI Service alone generated annualized revenue of approximately $14 billion, with deal sizes greater than $100 million more than doubling year-over-year and the company signing 18 contracts greater than $1 billion during the quarter.
Capex Guidance Lifted
CFO Amy Hood raised full-year fiscal 2026 capital expenditure guidance to approximately $138 billion from a prior range of $115-120 billion, citing accelerating AI infrastructure demand and the faster-than-expected ramp of the Stargate facility in Wisconsin. The new guidance puts Microsoft's combined Q3-Q4 capex run rate at roughly $42 billion per quarter — historic levels for the company.
The Wisconsin Stargate facility is now expected to come online in two phases beginning Q4 2026, ahead of the prior Q1 2027 schedule. Microsoft also announced expansions of data-center campuses in Ohio, Iowa, and Virginia, plus new builds in Indiana and Pennsylvania. Total contracted power capacity now stands at 28 gigawatts, up from 19 gigawatts disclosed at the January earnings call.
Productivity and Personal Computing Beats
The Productivity and Business Processes segment grew 18%, with Microsoft 365 Copilot crossing 6 million paid commercial seats — a 130% jump from the prior quarter as enterprise customers move beyond pilot programs into broad deployment. LinkedIn revenue rose 14%, and Dynamics 365 grew 22% year-over-year, both exceeding consensus.
More Personal Computing posted unexpected strength at +9% growth, with Windows OEM revenue benefiting from a Windows 11 upgrade cycle ahead of the October 14 Windows 10 end-of-support deadline. Xbox content and services revenue rose 18% on Activision Blizzard catalog strength. Wedbush's Dan Ives lifted his Microsoft price target to $720 from $650, calling it "the cleanest pure-play on the AI infrastructure cycle."