REDMOND, Washington, April 30, 2026, 04:02 PDT
Microsoft Corporation has slapped a $190 billion estimate on what it expects to spend building out AI through 2026, while also projecting Azure growth that tops what analysts had penciled in. That cloud optimism, though, comes with a hefty data-center tab. Shares wobbled at first after the numbers dropped, but regained their footing as executives flagged demand staying out in front of supply.
Timing’s key here. As the AI trade tightens up, investors are drilling deeper into who’s actually turning all that server and chip spending into real revenue. Alphabet’s Google Cloud booked a 63% jump in revenue, outpacing Microsoft Azure’s 40% and Amazon’s 28%. This year, major U.S. tech names are gearing up to pour more than $700 billion into AI infrastructure, according to Reuters.
Microsoft’s fiscal Q3 numbers landed firmly in the bulls’ camp: revenue jumped 18% to $82.9 billion, net income moved up 23% to $31.8 billion, and diluted EPS hit $4.27. Microsoft Cloud revenue posted $54.5 billion, up 29%. CEO Satya Nadella added that the company’s AI business has already crossed a $37 billion annual revenue run rate, a measure of annualized sales.
Microsoft shares slipped to $424.46, off roughly 1.1% from their last close, leaving the company with a market cap near $3.16 trillion. This action came ahead of the main U.S. cash-market open.
Microsoft is projecting a 39% to 40% jump in Azure and other cloud services revenue this quarter, measured in constant currency to factor out exchange-rate effects. “Customer demand continues to exceed supply,” CFO Amy Hood told analysts, adding that capex—covering things like chips and data centers—will top $40 billion for the quarter. For the 2026 calendar year, that figure is expected to hit roughly $190 billion, with higher component prices accounting for about $25 billion of the total. Microsoft
Copilot is still a tougher pitch. Microsoft added 5 million paid “seats” to its $30-a-month Microsoft 365 Copilot AI assistant, taking the total to 20 million—up from 15 million in January, vice president of investor relations Jonathan Neilson said. That’s a quarterly jump the company’s happy to highlight, though the figure stays modest compared to Microsoft’s vast enterprise reach. Reuters
Competitive heat is real. Google’s making waves as its AI tools, homegrown chips, and cloud offerings land on the market as a unified stack. Rebecca Wettemann, CEO of Valoir, told Reuters that some customers see Google’s AI as “more accurate and trustworthy than Copilot.” Microsoft, meanwhile, faces a different test: translating Copilot’s pilot projects and license sales into deeper, daily adoption. Reuters
The terms between Microsoft and OpenAI just shifted. Their revised deal, finalized this week, kills Microsoft’s exclusive rights to resell OpenAI’s models—now OpenAI can pitch to Amazon, Google, whoever they want. Despite that, Microsoft isn’t budging as the main cloud provider, and it keeps its 20% revenue cut through 2030. “Essential for OpenAI to be successful” in the enterprise, said D.A. Davidson’s Gil Luria of the new arrangement. Reuters
Outside of cloud, the numbers didn’t impress. Microsoft’s More Personal Computing unit posted a 1% drop in revenue. Windows OEM and Devices revenue slipped 2%. Xbox content and services? Down 5%. Search advertising—excluding traffic acquisition costs—was up 12%, but that was only a modest lift for a segment now overshadowed by Azure and AI.
The spread between spending and conversion is still the big concern. Microsoft reported its Microsoft Cloud gross margin dropped to 66%—AI infrastructure outlays and more intense AI product use are weighing on results, despite efficiency gains cushioning some of the impact. CFO Amy Hood told analysts capacity will stay tight, likely all the way through 2026.
Here’s the hurdle now: Microsoft needs to ramp up capacity for Azure quickly—otherwise, the pace could stall. Copilot and its other AI offerings also have to show they can justify the spend. For its fiscal fourth quarter, the company is projecting revenue in the $86.7 billion to $87.8 billion range. Commercial demand looks strong, though softer consumer numbers are weighing on the outlook.
