Microsoft Q3 Revenue Hits $82.9B, AI Boosts Growth to 123%

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Microsoft has announced its financial results for the third quarter of fiscal year 2026, ending March 31, showcasing impressive growth across various sectors. According to the company’s official report, total revenue for the quarter hit $82.9 billion, marking an 18% increase compared to the same period last year. Operating income also climbed by 20%, reaching $38.4 billion.

Net income, calculated under Generally Accepted Accounting Principles (GAAP), rose 23% to $31.8 billion. When viewed through non-GAAP measures, net income increased by 20%, and at fixed exchange rates, growth stands at 18%. Earnings per share (EPS) after dilution were reported at $4.27, reflecting a 23% year-over-year rise on a GAAP basis and a 21% increase non-GAAP, with an 18% growth rate at fixed exchange rates. Notably, the non-GAAP earnings exclude impacts related to investments in OpenAI.

Microsoft’s Chairman and CEO, Satya Nadella, emphasized the company’s focus on advancing cloud and AI infrastructure and solutions, helping enterprises capitalize on the era of intelligent automation. Nadella highlighted that Microsoft’s AI revenue has surged to over $37 billion annually, representing an incredible 123% year-over-year growth, positioning AI as a vital driver of the company’s expansion.

The company’s cloud segment stood out as a primary growth driver, generating $54.5 billion in revenue, which is a 29% increase over the previous year. When adjusted for currency fluctuations, this growth remains at 25%. Additionally, Microsoft’s commercial remaining performance obligations surged nearly 100% year-over-year to $6.27 trillion, indicating robust future revenue potential.

Microsoft’s Productivity and Business Processes division earned $35 billion, up 17% from the prior year on a reported basis, and 13% when adjusted for currency. Key contributors within this segment included a 19% increase in cloud revenue for Microsoft 365 Commercial and a 33% rise for the consumer version. LinkedIn revenue grew by 12%, and Dynamics 365 revenue expanded by 22%, all demonstrating sustained growth across services.

The Intelligent Cloud segment saw revenues reach $34.7 billion, increasing by 30% year-over-year and 28% when adjusted for currency. Azure and other cloud services led the segment, with a remarkable 40% growth rate, or 39% in fixed exchange rate terms, continuing a high-growth trajectory seen in recent periods.

One notable decline was observed in the More Personal Computing segment, which reported revenues of $13.2 billion, a slight decrease of 1% from the previous year. This decline was driven by a 2% reduction in Windows OEM and device revenues, along with a 5% drop in Xbox content and services revenue. However, search advertising revenue—excluding traffic acquisition costs—still grew by 12% year-over-year.

In addition to its impressive financial performance, Microsoft returned $10.2 billion to shareholders through dividends and stock repurchases, reaffirming its commitment to providing shareholder value.

This latest quarter underscores Microsoft’s strategic focus on cloud computing and AI, with the latter now functioning as a major revenue stream. As the company continues to push forward, its diverse business units demonstrate resilience and growth, cementing its position as a leader in the tech industry.