Microsoft reported fiscal fourth-quarter revenue of $90.0 billion on July 29, 2026, up 18% year-over-year, and disclosed that Azure had crossed $100 billion in annual revenue for the first time. The print reframes an 18-month debate about whether the hyperscaler capex cycle would ever show up in the top line. It just did.

Azure grew 43% in the quarter, the fastest pace since early 2022, versus the 40% analysts were modeling. Adjusted EPS of $4.74 cleared the $4.24 LSEG consensus, and revenue beat the Street’s $87.62 billion estimate. Operating income hit $40.6 billion, also up 18%. CFO Amy Hood then guided next quarter’s Azure growth to 45% at constant currency, above the 41.4% StreetAccount consensus, effectively telling the market that the acceleration isn’t a one-print anomaly.

“This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats,” Satya Nadella said. That’s up from more than 20 million in April, and Nadella told analysts hundreds of enterprises bought millions of seats of the high-end E7 productivity bundles. The Copilot line, long treated as a narrative question mark, is now doing enterprise-scale numbers.

The consumer side told the opposite story. Device and Windows OEM licensing revenue fell 7%, and Xbox revenue dropped 10%. Both matter less than they used to. Microsoft is now, structurally, an enterprise-AI infrastructure company with a legacy consumer tail.

Two accounting details deserve attention. The quarter included a $3.2 billion discrete gain on Microsoft’s Anthropic stake, and Hood disclosed that Microsoft is extending the useful life of data centers and office buildings to 25 years from 15. That second move flatters forward operating margins by stretching depreciation on the exact capex the company is defending. It’s a legible signal about how long management expects these assets to earn.

The sell side moved fast. Bank of America went to a $500 price target, citing “increasing validation of Microsoft’s AI strategy.” Barclays set $512. What’s notable isn’t the upgrades, it’s the framing: this is the first hyperscaler quarter where the AI-capex-to-AI-revenue conversion looks, to Wall Street, mechanical rather than aspirational. Every other name in the cohort now has to answer the same question against a harder comp.

Sources