Microsoft said on July 29, 2026 that Azure and other cloud services revenue grew 43% in the quarter ended June 30. CNBC reported the rate was the same in constant currency, up from 40% the quarter before sec.govcnbc.com. Chief executive Satya Nadella said in the results release that "Azure revenue surpassed $100 billion for the first time" in the fiscal year microsoft.com. Non-GAAP EPS of $4.74 and revenue of $90.01 billion beat LSEG consensus of $4.24 and $87.62 billion, CNBC reported cnbc.com.
Three figures from the same report determine how much of that beat an investor can rely on. Discrete items added $0.27 to diluted EPS, including a $3.2 billion gain on Microsoft's Anthropic stake microsoft.com. Capital expenditures and finance leases rose 69% to $41 billion while free cash flow fell 23% to $19.64 billion cnbc.com. In January, Microsoft said about 45% of its commercial backlog was tied to OpenAI cnbc.com. The shares had lost 19% in 2026 through the July 29 close, against a roughly 7% gain for the S&P 500 cnbc.com. Yahoo Finance reported a 15.5% rise the next day, which it called the largest single-day market-value increase in stock market history finance.yahoo.com.
A gain on Anthropic sits inside the adjusted number
Microsoft said the discrete items were measured against its own April 29, 2026 guidance, not against consensus. It listed lower-than-expected Voluntary Retirement Program costs alongside the Anthropic gain, partly offset by severance and Xbox impairment charges microsoft.com. It said it still exceeded expectations on revenue, operating income and diluted EPS after adjusting for them microsoft.com. Its non-GAAP results exclude only the impact of its OpenAI investments microsoft.com. So the Anthropic gain is counted in the adjusted figure as well as the GAAP one. Our read is that the $0.50 gap to consensus cannot be cleanly netted against the $0.27 benefit, because the two are measured from different baselines.
The OpenAI adjustment runs the other way this year, which is why GAAP growth outpaces the adjusted rate:
| Measure | Q4 FY2026 | Q4 FY2025 | Change |
|---|---|---|---|
| GAAP net income | $35,766M | $27,233M | 31% |
| Impact from OpenAI | $(480)M | $1,575M | $(2,055)M |
| Non-GAAP net income | $35,286M | $28,808M | 22% |
| GAAP diluted EPS | $4.81 | $3.65 | 32% |
| Non-GAAP diluted EPS | $4.74 | $3.86 | 23% |
Source: Microsoft results release sec.gov.
Calendar-2026 spending holds flat after two accounting changes
Chief financial officer Amy Hood reiterated calendar-2026 spending plans. She also said Microsoft will extend the useful life of office and data center buildings to 25 years from 15, and will classify more future data center leases as operating leases rather than finance leases, CNBC reported cnbc.com. She said the adjustment leads to roughly $175 billion in capital expenditures and finance leases for the calendar year cnbc.com.
A longer useful life spreads each building's cost over more years, which lowers annual depreciation. An operating lease sits outside a metric defined as capex plus finance leases. Our read is that part of the reported steadiness is definitional rather than a slowdown in cash committed to data centers. For fiscal 2027, Hood said she sees further capex growth, citing "demand signals across our portfolio," and expects free cash flow to stay positive cnbc.com.
The quarter's own capex figure differs by source. Stocktwits reported $35.8 billion against expectations of $36.14 billion stocktwits.com. Yahoo Finance reported $41 billion including leases, below an anticipated $42 billion finance.yahoo.com. Our read is that the $5.2 billion difference is finance leases, but that is an inference from the labels.
How much of the backlog is OpenAI's
Commercial remaining performance obligation rose 84% to $678 billion sec.gov. It grew 8% from the prior quarter, and Microsoft said the sequential growth was driven by clients other than AI model developers cnbc.com. The January figure puts OpenAI's share at about $281 billion, 45% of $625 billion. If that dollar amount had not moved, OpenAI's share would now be about 41%, by our arithmetic. That assumption is ours, and nothing in the company's statement fixes it.
Deutsche Bank, which rates the shares a buy, said in a note that Microsoft faces "some concentration risk" with OpenAI, especially with the ascent of open-source models cnbc.com. For the September quarter, Microsoft guided revenue to $89.85 billion to $90.95 billion, 16% growth at the midpoint, against LSEG's $89.66 billion cnbc.com. Yahoo Finance reported that Microsoft expects Azure growth of 45% finance.yahoo.com.
The next report is estimated for October 27, 2026 cnbc.com. The test for the backlog is whether sequential growth again comes from customers other than model developers, and whether it is large enough to carry fiscal 2027 capex growth that Hood has already signalled.