Microsoft Q1 Revenue Rises 19% to $92.3B as Cloud Offsets Device Decline

US technology giant Microsoft has reported its financial results for the first quarter of fiscal year 2027, ending in September 2026. The company generated $92.3 billion in revenue, a 19% increase year-over-year. Operating income rose 21% to $45.9 billion, while net income surged 32% to $36.6 billion. According to a report by German tech outlet heise online, these figures exceeded market expectations, prompting Microsoft shares to rise nearly 4% in after-hours trading.

This marks the first full quarter under Microsoft's new segment reporting structure. The 'Agents and Infrastructure' segment performed strongly, reaching $76.8 billion in revenue, up 25% year-over-year. Within this, Azure cloud services grew by 48%, and total Microsoft Cloud revenue hit $63.9 billion, up 30%. In contrast, the 'Devices and Consumer' segment lagged, with revenue falling 3% to $15.5 billion. Specifically, Windows licensing and devices revenue dropped 22%, and Xbox gaming declined 2%, although search and advertising grew 12%.

Artificial intelligence product adoption significantly contributed to the results. CEO Satya Nadella told analysts that usage of Microsoft 365 Copilot increased by 50% compared to the previous quarter. While Microsoft did not disclose specific user counts for Copilot, CFO Amy Hood stated that the Microsoft 365 E7 package, launched earlier this year and integrated with Anthropic's Claude technology, now serves millions of users.

For the current quarter, Microsoft guided revenue between $96 billion and $97.1 billion, implying approximately 19% year-over-year growth, which is above the consensus estimate of $95.6 billion. This outlook reinforces investor confidence in Microsoft's ability to monetize AI, demonstrating that cloud and AI demand can offset cyclical weaknesses in the traditional PC market.