Microsoft Reports $39.367 Billion in Property and Equipment Additions as Azure Grows 48%

Key Facts

Microsoft reported results for the first quarter of its fiscal 2027, posting revenue of $92.279 billion in the three months ended September 30, 2026, up 19% year over year. Additions to property and equipment totaled $39.367 billion, compared with $19.394 billion in the year-earlier period. The figures put actual spending on assets alongside growth in the cloud business, which drives a significant part of the company’s operations. Chief Financial Officer Amy Hood said the results exceeded the company’s expectations for revenue, operating income and earnings per share. Microsoft held its earnings call on October 28, 2026, at 5:30 p.m. Eastern time.

The quarter’s results showed strong growth in the cloud business, with Microsoft Cloud revenue reaching about $63.9 billion, up 30% year over year. Azure revenue also rose 48%, to $33.165 billion from $22.384 billion in the same period of 2025. The performance highlights expanding cloud revenue alongside the sharp increase in additions to property and equipment, items that reflect the company’s investment in its assets. Overall revenue rose to $92.279 billion from $77.673 billion a year earlier. Microsoft said results exceeded its expectations across three key measures: revenue, operating income and earnings per share.

Microsoft’s commercial remaining performance obligations, the value of contracts for which revenue has not yet been recognized, totaled $677 billion in the first quarter of fiscal 2027, up 73% year over year. The figure points to the scale of the company’s accumulated contractual commitments, as it coincided with growth in Azure and cloud revenue. In the Agents and Infra segment, revenue was $76.8 billion, up 25% from the year-earlier period. These indicators provide context for the expansion of infrastructure- and service-related activity across the company’s business. Microsoft Cloud revenue alone was $63.9 billion, equivalent to annual growth of 30%.

The capital spending comparison takes on added importance in light of the company’s earlier comments on its investment plans. In July 2026, Microsoft said its capital spending in the fourth quarter of fiscal 2026 was $41 billion, with about two-thirds going to short-lived assets, particularly CPUs and GPUs. In the same remarks, Chief Financial Officer Amy Hood forecast that capital spending in the first quarter of fiscal 2027 would exceed $50 billion, including the impact of lease reclassifications. The company later reported $39.367 billion in additions to property and equipment during the quarter ended September 30. The comparison puts the actual figure reported under additions to property and equipment alongside an earlier capital spending forecast, though the company uses different labels for the two items in its disclosures.

In the market, CoreWeave and Nebius shares closed at $59.57 and $170.47, respectively, on October 27, according to EL7 data, a day before Microsoft’s earnings announcement. Microsoft shares closed at $527.35999 on October 28. The closing prices recorded for CoreWeave and Nebius do not represent their share movements during the earnings announcement session. Shares of specialized cloud companies had moved earlier in October: CoreWeave fell 4.5%, Nebius dropped 3.4% and IREN declined 3.3% in premarket trading on October 26, according to Reuters via Investing.com. Reuters said concerns about a widening gap between AI infrastructure investment and revenue were among the factors behind that day’s declines.

Against this backdrop of volatility, Reuters reported on October 22 that short interest in CoreWeave, IREN, Nebius, Applied Digital and Core Scientific ranged from about 20% to 26% of their free float, according to ORTEX. The agency said investors who bet against specialized cloud companies and data centers had made $6 billion in paper profits from the start of October through October 22, amid concerns about the sustainability of debt-funded expansion. By October 26, CoreWeave, Nebius and IREN shares had fallen more than 30% for the month, according to Reuters. Microsoft’s results, released after the market close on October 28, combined growth in Azure and cloud revenue with substantial additions to property and equipment. The company had announced on October 7 that first-quarter results would be released after the market close on October 28, then held its earnings call that same day.