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OpenAI Impact Tempers 18 Percent Revenue Jump in Microsoft's Q1 FY2026
Microsoft posted $77.7 billion in revenue for the first quarter of its fiscal 2026, up 18 percent from last year, fueled by continued growth in cloud and AI services.
Operating income rose 24 percent to $38 billion, while net income climbed by 12 percent to $27.7 billion (GAAP). Microsoft Cloud revenue hit $49.1 billion, a 26 percent increase, with Azure and other cloud services revenue up 40 percent. Revenue in Productivity and Business Processes increased by 17 percent to reach $33 billion.
However, Microsoft said it took a hit from its ongoing partnership with OpenAI. "In the first quarter of fiscal year 2026, net income and diluted earnings per share were impacted by losses from investments in OpenAI, which resulted in a decrease in net income and diluted earnings per share of $3.1 billion and $0.41, respectively," it said. "In the first quarter of fiscal year 2025, net income and diluted earnings per share were impacted by losses from investments in OpenAI, which resulted in a decrease in net income and diluted earnings per share of $523 million and $0.07, respectively."
In a webcast, Microsoft CEO, Satya Nadella said, “Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry.” The company returned $10.7 billion to shareholders through buybacks and dividends during the quarter.
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Posted by Redmond Channel Partner magazine staff on October 30, 2025