Microsoft earnings: AI capex of $45.2 billion, Azure up 48%, and a 2026 spending view trimmed to about $170 billion

Microsoft earnings for its fiscal 2027 first quarter, reported on October 28, 2026, put numbers on the AI capex question investors have been asking throughout 2026. Microsoft said revenue rose 19% to $92.3 billion for the quarter ended September 30, and Azure revenue grew 48%. On the call, CFO Amy Hood said capital expenditures, including finance leases, were $45.2 billion, lower than planned because some third-party data-center capacity arrived late, and that spending for calendar 2026 should be about $170 billion, slightly below the roughly $175 billion she gave in July. The results came two days after Microsoft offered a voluntary exit to about 60,000 employees, covered in our story on the Microsoft buyout package.

This story is based on Microsoft's October 28 earnings release and investor metrics page, Microsoft's own transcripts of the October 28 and July 29 earnings calls, and reporting by Fortune and SiliconANGLE, checked October 29, 2026. It reports results and company statements only and isn't investment advice.

The short version

• Revenue: $92.3 billion, up 19%. Operating income $45.9 billion, up 21%. GAAP diluted earnings per share $4.92.
• Azure: revenue up 48%, also 48% in constant currency, up from 42% growth in the June quarter.
• AI capex: $45.2 billion including finance leases, Hood said; the cash flow statement shows $39.4 billion of additions to property and equipment.
• Guidance: more than $50 billion of capex in the December quarter, about $170 billion for calendar 2026, and Azure growth of 49% to 50% in constant currency.
• OpenAI: net gains from Microsoft's OpenAI investments added $207 million to net income; they're excluded from non-GAAP results.
• Buyouts: the voluntary exit offer is built into Microsoft's cost guidance; no cost was given.

What were Microsoft's results for the September quarter?

Microsoft now reports two segments, after changes it announced in September 2026: Agents and Infra, and Devices and Consumer. Prior periods were recast to match. Agents and Infra brought in $76.8 billion, up 25%; Devices and Consumer fell 3% to $15.5 billion. Net income was $36.6 billion, up 32%, and non-GAAP earnings per share, which exclude the OpenAI effects described below, rose 18% to $4.89.

Last verified: October 29, 2026

Hood said in the release that "Results exceeded expectations across revenue, operating income, and earnings per share." Satya Nadella said on the call that Microsoft added 24 new data centers across five continents in the quarter. Commercial remaining performance obligation, the contracted revenue Microsoft has yet to recognize, was $677 billion, roughly flat with the $678 billion at the end of June, according to Microsoft's metrics page.

How much is Microsoft spending on AI capex?

Hood said capital expenditures, which Microsoft counts including finance leases, were $45.2 billion "as some third-party capacity deliveries we expected in Q1 were delayed." Finance leases accounted for $7.4 billion and cash paid for property and equipment was $39.4 billion, she said, and roughly three quarters of the spending went to "short-lived assets, primarily CPUs and GPUs." SiliconANGLE reported that analysts had expected up to $50.67 billion.

For comparison, Hood put the June quarter at $41 billion on Microsoft's July 29 call, as our buyout story reported. So spending still rose from one quarter to the next, just by less than Microsoft had planned.

What is Microsoft's capex guidance now?

Lower for 2026, higher in the near term. According to Microsoft's transcript of the call, Hood said:

• "In Q2, we expect CapEx spend will be over $50 billion."
• "Therefore, for the calendar year, spend should be approximately $170 billion due to the 3P capacity delays noted earlier."

In July, Hood had put calendar 2026 at about $175 billion, after shifting more data-center leases from finance to operating leases, which aren't counted as capex. The new figure trims that by about $5 billion, and Hood tied the change to the timing of third-party deliveries rather than to less demand: "Customer demand continues to exceed available supply," she said, and some third-party "GPU as a service" contracts have moved into the second half of the fiscal year. She said spending should accelerate in the second half, and that Microsoft expects to "remain free cash flow positive in FY27." Free cash flow in the quarter was $18.6 billion.

Hood also said Microsoft "will access additional sources of funding when we believe it is attractive to do so," and that leasing is already one such vehicle. She didn't announce a specific financing.

Other guidance for the December quarter: revenue of $96 billion to $97.1 billion, growth of 18% to 19%, and Azure growth of 49% to 50% in constant currency.

The spending pattern matches what other AI spenders reported this month. Meta raised the bottom of its 2026 range to $135–145 billion, as our Meta Q3 2026 earnings story shows, and Alphabet kept its 2026 range at $195–205 billion on the same day as Microsoft, covered in our Alphabet Q3 2026 earnings story.

What did Microsoft say about OpenAI?

Mostly accounting. The earnings release says net gains from Microsoft's OpenAI investments added $207 million to net income and $0.03 to diluted earnings per share in the quarter, against net losses that cut net income by $3.1 billion, or $0.41 a share, a year earlier. Microsoft excludes both from its non-GAAP figures. Hood said other income and expense, adjusted for OpenAI, was negative $234 million, and that she expects about negative $300 million in the December quarter, excluding any OpenAI impact.

Nadella said in his prepared remarks that "Azure OpenAI directly benefitted in the last quarter with big advances in OpenAI's models," and described Azure as a place where "Anthropic and OpenAI" models compete for customers' workloads. Microsoft gave no figure for OpenAI's share of Azure revenue. An analyst's estimate of that share on the call wasn't confirmed by management, so it isn't reported here. OpenAI's models are now also sold by a rival cloud, as our story on OpenAI models on Google Cloud explains.

Did Microsoft mention the buyouts?

Briefly. "Our cost guidance across both COGS and OpEx includes an estimate for the recently announced employee voluntary exit offer," Hood said on the call. She gave no cost, uptake estimate or headcount figure, and the earnings release doesn't mention the offer. The terms, about 60,000 eligible employees with a deadline in the first week of December, come from reporting summarized in our buyout story.

What's confirmed, reported and uncertain

• Confirmed (Microsoft's release and metrics page): revenue, operating income, net income, EPS, segment revenue, Microsoft Cloud revenue, Azure growth of 48%, the $677 billion commercial remaining performance obligation, $39.4 billion of additions to property and equipment, and the OpenAI gain and prior-year loss.
• Confirmed (Microsoft's transcripts of the October 28 and July 29 calls): $45.2 billion of capex including $7.4 billion of finance leases; more than $50 billion in the December quarter; about $170 billion for calendar 2026, against about $175 billion in July; December-quarter revenue and Azure guidance; the voluntary exit offer in cost guidance; the OpenAI and funding remarks.
• Reported: the analyst capex estimate (SiliconANGLE).
• Uncertain: the cost of the voluntary exit offer, how much of the $170 billion lands in which quarter, and OpenAI's contribution to Azure revenue.