Key Insights in Microsoft’s Earnings Report Today
Microsoft is set to announce its first-quarter fiscal year 2026 earnings report today, reflecting insights into its recent business performance. Last quarter marked a significant milestone, with the company’s Azure cloud segment seeing a robust revenue increase of 39% year-on-year, a figure that positions it favorably within the tech industry. Furthermore, Microsoft reported an impressive $368 billion backlog of business, indicating strong future revenue potential.
Key Financial Estimates
Analysts’ consensus from FactSet anticipates earnings per share of $3.67 and total revenue of approximately $75.4 billion for the quarter that ended on September 30, 2025. This includes anticipated revenue of $30.2 billion from Microsoft’s Intelligent Cloud unit, which encompasses Azure and other cloud services. The projected year-on-year growth for Azure revenue is estimated at around 38%.
Updates on OpenAI Partnership
In a notable development, Microsoft has recently restructured its partnership with OpenAI. This revised deal, valued at $13 billion, offers new opportunities following intensive negotiations. Microsoft’s stake in OpenAI is now estimated to be worth about $135 billion, reflecting a 27% ownership in the company.
As part of the enhanced partnership, OpenAI has committed to purchasing $250 billion worth of Azure computing resources. Despite some advantages, Microsoft relinquished its right of first refusal as OpenAI’s primary computing partner, which could lead to potential risks if OpenAI opts to utilize services from competitors in the future.
Intellectual Property Rights
Microsoft retains intellectual property rights related to OpenAI’s models and products, extending these rights through 2032. Additionally, Microsoft maintains access to research IP rights until 2030, unless OpenAI achieves artificial general intelligence (AGI), at which point these rights would cease. This arrangement affords Microsoft the ability to integrate cutting-edge AI into its products for the foreseeable future.
Operational Changes and Market Impact
In broader operational news, Microsoft is shifting its hardware production away from China. This decision comes amid rising tensions and tariffs impacting the industry, notably affecting Microsoft’s gaming division. The company has already implemented price increases for the Xbox and raised the monthly subscription cost of Game Pass by 50% earlier this year. Microsoft’s CFO, Amy Hood, indicated that while capital expenditures would surpass $30 billion in Q1, growth in spending may moderate as the year progresses, particularly in the second half of the fiscal year.
Investors will be attentive as Microsoft releases its earnings after the market closes today at 4 p.m. ET. This report promises to shed light on the company’s financial health and the effectiveness of its strategic initiatives.
