Microsoft (MSFT) Q3 earnings report 2026

Microsoft Exceeds Expectations with Strong Quarterly Performance

Microsoft surprised investors by issuing higher-than-expected capex guidance for 2026, alongside quarterly earnings and revenue that topped estimates. Here’s a breakdown of how the tech giant performed compared to LSEG consensus:

• Earnings per share: $4.27 adjusted vs. $4.06 expected
• Revenue: $82.89 billion vs. $81.39 billion expected

Microsoft’s revenue saw an impressive 18% year-over-year growth in the quarter ending on March 31. The company reported a net income of $31.78 billion, or $4.27 per share, up from $25.82 billion, or $3.46 per share, in the same quarter the previous year. Adjusted earnings excluded a $14 million decrease in net income from Microsoft’s OpenAI investments.

Looking ahead, Microsoft’s finance chief, Amy Hood, provided guidance for fiscal fourth-quarter revenue in the range of $86.7 billion to $87.8 billion. Azure cloud growth is expected between 39% and 40% at constant currency, exceeding StreetAccount’s consensus of 37%.

Hood’s forecast suggests a slight dip in Microsoft’s operating margin for the fiscal fourth quarter to 44% from 46.3%. The company reported $31.9 billion in fiscal third-quarter capital expenditures and finance leases, up 49% year-over-year. Microsoft anticipates $190 billion in capital expenditures for the 2026 calendar year, with a notable impact from higher component prices.

Microsoft’s headcount is projected to decrease in the 2027 calendar year ending in June 2027 as the company focuses on increasing pace and agility in its operations.

Revenue from Microsoft’s Azure and other cloud services surged 40%, while the Intelligent Cloud segment recorded $34.68 billion in revenue. The Productivity and Business Processes segment also performed well, generating $35.01 billion in revenue.

Microsoft’s More Personal Computing unit, which includes Windows, Xbox, Surface devices, and Bing search advertising, contributed $13.19 billion in revenue, despite a 1% decline. Sales of Windows licenses were down 2%.

Overall, Microsoft continues to strengthen its position in the market, with annualized revenue from AI reaching $37 billion and a growing commercial remaining performance obligations of $627 billion.

The company’s stock has faced challenges in 2026, but its recent performance indicates resilience and potential for growth in the future.

Stay tuned for more updates on Microsoft’s progress and industry trends.

WATCH: Microsoft surpasses revenue and earnings expectations, with Azure revenue growing by 40%