Microsoft beats Q1 FY27 expectations as cloud growth accelerates and AI spending lifts
Microsoft beats Q1 FY27 expectations as cloud growth accelerates and AI spending lifts
Microsoft reported fiscal first-quarter 2027 revenue of $92.279 billion for the period ended 30 September, up 19% from $77.673 billion a year earlier. Operating income rose 21% to $45.915 billion and GAAP net income increased 32% to $36.629 billion.
Cloud growth leads the quarter
Microsoft Cloud revenue was $63.9 billion, up 30% year over year, while Azure growth accelerated to 48%. The company said the quarter exceeded expectations across revenue, operating income and earnings per share, driven by demand across its cloud portfolio.
Cash generation and AI investment
Operating cash flow was $58.0 billion and free cash flow was $18.6 billion, according to the company's financial disclosures. Capital expenditure was $39.4 billion in the quarter, reflecting the build-out of data-centre capacity; Microsoft said some third-party capacity deliveries expected in the quarter were delayed. The cash-flow profile was therefore strong in absolute terms but lower than the prior-year quarter as infrastructure spending rose.
Reported adjusted EPS of $4.89 exceeded the FactSet consensus of $4.71, while revenue of $92.28 billion was above the $90.62 billion consensus cited by Investor's Business Daily. A $207 million gain from Microsoft's OpenAI investment increased net income by $0.03 per diluted share, so the comparison should not be read as entirely operating-driven.
- Azure growth and the conversion of AI demand into recurring cloud revenue.
- Whether data-centre capacity deliveries and capital spending remain aligned with demand.
- Free cash flow after the planned increase in infrastructure investment.
- The balance between shareholder returns and AI-related capacity commitments.
The results are company-reported and the consensus figures are third-party estimates. They are not investment advice.
Revenue
$92.3B
↑ +19% y/y Q1 FY27
Operating income
$45.9B
↑ +21% y/y Q1 FY27
GAAP EPS
$4.92
↑ +32% y/y Q1 FY27
Free cash flow
$18.6B
↓ -$7.0B y/y Q1 FY27
Sources
Quarterly revenue, Microsoft
Margins by quarter
Twelve quarters of figures
| Quarter | Q1 '24 | Q2 '24 | Q3 '24 | Q4 '24 | Q1 '25 | Q2 '25 | Q3 '25 | Q4 '25 | Q1 '26 | Q2 '26 | Q3 '26 | Q4 '26 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $56.5B | $62.0B | $61.9B | $64.7B | $65.6B | $69.6B | $70.1B | $76.4B | $77.7B | $81.3B | $82.9B | $90.0B |
| Revenue growth | 12.8% | 17.6% | 17.0% | 15.2% | 16.0% | 12.3% | 13.3% | 18.1% | 18.4% | 16.7% | 18.3% | 17.8% |
| Gross margin | 71.2% | 68.4% | 70.1% | 69.6% | 69.4% | 68.7% | 68.7% | 68.6% | 69.1% | 68.0% | 67.6% | 67.2% |
| Operating margin | 47.6% | 43.6% | 44.6% | 43.1% | 46.6% | 45.5% | 45.7% | 44.9% | 48.9% | 47.1% | 46.3% | 45.1% |
| Net income | $22.3B | $21.9B | $21.9B | $22.0B | $24.7B | $24.1B | $25.8B | $27.2B | $27.7B | $38.5B | $31.8B | $35.8B |
| Diluted EPS | $2.99 | $2.93 | $2.94 | $2.95 | $3.30 | $3.23 | $3.46 | $3.65 | $3.72 | $5.16 | $4.27 | $4.81 |
| Cash from operations | $30.6B | $18.9B | $31.9B | $37.2B | $34.2B | $22.3B | $37.0B | $42.6B | $45.1B | $35.8B | $46.7B | $55.4B |
| Capital expenditure | $9.9B | $9.7B | $11.0B | $13.9B | $14.9B | $15.8B | $16.7B | $17.1B | $19.4B | $29.9B | $30.9B | $35.8B |
| Free cash flow | $20.7B | $9.1B | $21.0B | $23.3B | $19.3B | $6.5B | $20.3B | $25.6B | $25.7B | $5.9B | $15.8B | $19.6B |
| Dividends and buybacks | $9.9B | $9.6B | $9.8B | $9.8B | $9.7B | $11.2B | $11.0B | $10.7B | $11.8B | $14.2B | $11.4B | $11.3B |
This story describes figures the company has published. It is for information only and is not investment advice or a recommendation to buy, sell or hold any security. Check the original filings before relying on any figure. Stoqly is not affiliated with the SEC or Microsoft.
