Microsoft Discloses Azure Revenue in Dollars as Cloud and OpenAI Ties Drive Record $92.3B Quarter

Microsoft delivered its 10th consecutive quarter of record revenue on Wednesday, reporting $92.3 billion in sales for the first quarter of its fiscal 2027, up 19% from a year earlier. The company also broke from its longstanding practice of leaving Azure’s revenue in percentage-only form, disclosing that the cloud unit brought in $33.2 billion in the July–September quarter, up 48%.

Azure topped the $30.7 billion Alphabet reported for Google Cloud in the same quarter, putting Microsoft’s cloud segment slightly ahead, according to TechCrunch. But Google Cloud — which includes Workspace subscriptions — roughly doubled its revenue from a year earlier, growing about twice as fast as Azure, by TechCrunch’s calculations. Amazon, whose Amazon Web Services remains the largest cloud business, reports earnings on Thursday.

The $33.2 billion figure came in about $850 million above the $32.3 billion analysts expected, TechCrunch said, and beat the 44% to 45% growth Microsoft CFO Amy Hood forecast on the company’s July earnings call. Microsoft said Azure is now its largest and fastest-growing product line, accounting for roughly 36% of total revenue.

The disclosure arrives as part of a broader change in Microsoft’s financial reporting. The company has reorganized from three segments into two: Agents and Infra — which groups Azure with Microsoft 365’s cloud business — and Devices and Consumer. Agents and Infra contributed $76.8 billion, up 25% and about 83% of total revenue. Devices and Consumer, which includes Windows, Xbox, Surface, and search and advertising, brought in $15.5 billion, down 3%, with Windows OEM and devices revenue off 22% year over year.

Overall, Microsoft Cloud revenue reached $63.9 billion for the quarter, up 30% and nearly 70% of total revenue, according to TechCrunch and The Verge.

OpenAI remains a significant line on Microsoft’s income statement. Microsoft generated $10 billion from commercial arrangements with OpenAI — including revenue-sharing payments — in the quarter ended September 30, TechCrunch reported, citing the company’s regulatory filing. That is nearly 11% of total quarterly revenue. For the full 2026 fiscal year, revenue from OpenAI hit $24.1 billion; at the latest quarterly pace, Microsoft would pull in roughly $40 billion annually from those arrangements.

Microsoft also reported $7.2 billion in outstanding receivables from OpenAI at quarter’s end, up from $6 billion at the end of June. TechCrunch noted the company did not break down how much of the revenue came from revenue-sharing versus Azure cloud services.

The relationship has loosened but remains financially deep. OpenAI committed to buying an additional $250 billion in Azure services under an October 2025 agreement, and Microsoft’s ownership stake in OpenAI dipped to about 24% in September from roughly 25% in June, continuing a gradual decline from about 27% after the October 2025 recapitalization, TechCrunch reported.

The company is still spending heavily to meet cloud demand. Capital expenditures topped $45.2 billion in the quarter, an all-time record, and commercial remaining performance obligations — future revenue committed under existing contracts — rose 73% to $677 billion, per TechCrunch.

Microsoft’s PC hardware business, by contrast, is under pressure. The Verge reported that the overall PC market dropped 20% in the recent quarter amid what it described as a “RAMageddon” crisis, with memory prices pushing Surface prices higher. Microsoft attributed the Windows OEM and devices decline to the benefit of Windows 10 end-of-support in the prior year, OEM inventory drawdowns, and a weaker PC market. CFO Amy Hood said on the company’s earnings call that she expects Windows OEM revenue to decline again next quarter, around “the mid 30s,” with declines expected through the 2027 fiscal year, according to The Verge.

Xbox also posted softness: hardware revenue declined 14% year over year, while content and services — including Game Pass — fell 2%, The Verge reported. The quarter was marked by layoffs and studio spin-offs, and Xbox CEO Asha Sharma has said Microsoft aims to return Xbox to player and revenue growth by the end of fiscal 2027, with a goal of sustained double-digit growth by fiscal 2030.

CEO Satya Nadella, on the earnings call, framed Microsoft’s push into hybrid AI for Windows. “We are executing on our vision to bring hybrid intelligence to every desk in every home, making every PC a secure agent box,” he said, according to The Verge. “As more capable models run locally, we see an opportunity to make more intelligence effectively unmetered.” He also said Microsoft aims to deliver first-party models with capabilities comparable to leading models within three to six months of release, at a fraction of the training cost.

Net income rose 32% year over year, with TechCrunch reporting GAAP net income of $36.6 billion for the quarter.