Microsoft (MSFT) reported fiscal Q4 2026 earnings on July 29, 2026, for the quarter ended June 30, 2026: revenue of $90.0 billion, up 18%, operating income of $40.6 billion, up 18%, and GAAP diluted earnings per share of $4.81, up 32% [1]. Azure and other cloud services revenue grew 43%, Microsoft Cloud revenue reached $59.3 billion, up 27%, and the commercial remaining performance obligation swelled 84% to $678 billion [1][2]. The stock jumped 15.5% to $451.10 on July 30 and kept climbing to $503.81 by August 11, 2026 [3]. This Microsoft fiscal Q4 2026 earnings recap covers the segments, the one-time items, the market reaction, and the valuation.
Microsoft fiscal Q4 2026 earnings: what the company reported
All three segments were reported, but the growth came from one. Intelligent Cloud revenue rose 32% to $39.3 billion (31% in constant currency), Productivity and Business Processes rose 14% to $37.8 billion, and More Personal Computing fell 4% to $12.9 billion [1]. Within the segments, Microsoft 365 commercial cloud revenue grew 14% (16% adjusted), Microsoft 365 consumer cloud grew 24%, LinkedIn grew 12%, Dynamics 365 grew 13%, Windows OEM and devices fell 7%, Xbox content and services fell 10%, and search and news advertising excluding traffic acquisition costs grew 10% [1]. Microsoft 365 Copilot passed 30 million paid seats [2]. Non-GAAP net income was $35.3 billion, up 22%, and non-GAAP diluted EPS was $4.74, up 23% [1].
| Metric | Fiscal Q4 2026 | Change |
|---|---|---|
| Revenue | $90.0 billion | Up 18% (17% constant currency) |
| Operating income | $40.6 billion | Up 18% |
| GAAP net income | $35.8 billion | Up 31% |
| GAAP diluted EPS | $4.81 | Up 32% |
| Non-GAAP diluted EPS | $4.74 | Up 23% |
| Microsoft Cloud revenue | $59.3 billion | Up 27% |
| Azure and other cloud services | n/a | Up 43% |
| Commercial remaining performance obligation | $678 billion | Up 84% |
One-time items and the full fiscal year
GAAP net income of $35.8 billion grew faster than operating income because it included a $3.2 billion gain on Microsoft's investment in Anthropic [1][2]. That is why GAAP EPS rose 32% while non-GAAP EPS rose 23%. For the full fiscal year 2026, revenue was $331.8 billion, up 18%, operating income was $155.2 billion, up 21%, GAAP net income was $133.7 billion, up 31%, and GAAP diluted EPS was $17.95, up 32%, with non-GAAP EPS of $17.28, up 22% [1]. Capital expenditures for the fiscal year were $115.9 billion [1]. The company returned $10.2 billion to shareholders through dividends and buybacks in the quarter [1].
Why Azure at 43% matters more than the headline
Azure growth of 43% is an acceleration for a business already measured in the tens of billions per quarter, and the $678 billion commercial backlog, up 84%, gives unusual visibility for a software company [1][2]. Backlog of that size, however, is concentrated in a small number of large AI contracts, so its quality depends on those customers' ability to pay over multi-year terms. The counterweight is the capex bill: $115.9 billion in fiscal 2026 is more than a third of revenue, and depreciation from that spending will flow through cost of revenue for years [1]. So far the model is working: operating income grew as fast as revenue in the quarter and faster than revenue for the year, which means Microsoft has absorbed the spending without margin erosion.
How MSFT stock reacted to fiscal Q4 2026 earnings
The reaction was the largest one-day move in the stock in years. DataPorium's stock market data shows MSFT closing at $390.54 on July 29 before the after-hours release, then rising 15.5% to $451.10 on July 30 on volume of about 110 million shares, more than double the prior session [3]. The rally continued: $464.72 on July 31, $487.65 on August 3, $506.06 on August 10, and $503.81 on August 11, 2026, about 29% above the pre-report close [3]. The shares had closed as low as $352.83 on June 25, so the report reversed a spring decline that had pushed the stock down from $460.52 on June 1 [3].
Microsoft valuation after the report
GAAP net income of $35.8 billion and EPS of $4.81 imply about 7.44 billion diluted shares, which at $503.81 gives a market value of roughly $3.75 trillion [1][3]. On fiscal 2026 non-GAAP EPS of $17.28 the stock trades at about 29 times trailing earnings, and at about 28 times GAAP EPS of $17.95 [1][3]. That is a premium to the broad market but not extreme for a company growing revenue 18% with a 45% operating margin (operating income of $40.6 billion on $90.0 billion of revenue). The risk is that the multiple now assumes Azure stays above 40% growth and that the backlog converts on schedule. Investors may consider that the stock's 29% move in two weeks has already priced in a good part of the acceleration.
- Growth engine: Intelligent Cloud up 32%, Azure up 43%, backlog $678 billion [1][2].
- Soft spots: More Personal Computing down 4%, Windows OEM down 7%, Xbox content down 10% [1].
- Capital: $115.9 billion of fiscal 2026 capex against $155.2 billion of operating income [1].
What to watch next
The fiscal Q1 2027 report in late October will be the first test of the new multiple. Investors may consider tracking Azure growth against the 43% just posted, the pace of commercial backlog conversion into revenue, capex guidance for fiscal 2027, and gross margin, which will absorb rising depreciation. Any update on Copilot seat growth beyond 30 million would show whether AI revenue is broadening beyond infrastructure [2].
Microsoft's fiscal Q4 2026 quarter showed Azure accelerating to 43% while operating income kept pace with revenue, and the stock's 29% rally since the report reflects the market's decision that the AI capex is paying off.
Key takeaways
- Fiscal Q4 2026 revenue rose 18% to $90.0 billion, operating income rose 18% to $40.6 billion, and GAAP EPS was $4.81 [1].
- Azure grew 43%, Microsoft Cloud revenue was $59.3 billion, and commercial backlog reached $678 billion, up 84% [1][2].
- A $3.2 billion Anthropic investment gain lifted GAAP net income; non-GAAP EPS of $4.74 rose 23% [1].
- MSFT rose 15.5% on July 30 and closed at $503.81 on August 11, 2026, about 29 times fiscal 2026 non-GAAP EPS [1][3].
- Fiscal 2026 capex was $115.9 billion against revenue of $331.8 billion [1].
Frequently asked questions
What were Microsoft's fiscal Q4 2026 earnings?
Microsoft reported revenue of $90.0 billion, up 18%, operating income of $40.6 billion, GAAP diluted EPS of $4.81, and non-GAAP diluted EPS of $4.74 for the quarter ended June 30, 2026 [1].
How fast did Azure grow in Microsoft's fiscal Q4 2026?
Azure and other cloud services revenue grew 43% year over year, and total Microsoft Cloud revenue rose 27% to $59.3 billion [1].
Why did Microsoft stock jump after the July 2026 earnings report?
MSFT rose 15.5% to $451.10 on July 30, 2026, after the report showed Azure growth accelerating to 43% and commercial backlog up 84% to $678 billion [1][3].
What was Microsoft's full fiscal year 2026 revenue?
Fiscal 2026 revenue was $331.8 billion, up 18%, with operating income of $155.2 billion and GAAP diluted EPS of $17.95 [1].
