Microsoft beats expectations as cloud and AI drive fiscal Q3 2026 surge
Revenue climbed 18 per cent to $82.9 billion, with cloud obligations nearly doubling and AI growth accelerating sharply
Microsoft Corp has reported a robust fiscal third quarter for 2026, delivering revenue that surpassed analyst forecasts. The American technology giant, headquartered in Redmond, Washington, posted an 18 per cent year-on-year increase in revenue, reaching $82.9 billion. This figure exceeds the Street's expectation of $81.39 billion, marking a strong finish to the quarter ended 31 March.
The company's cloud division remains a primary engine for growth, with revenue surging 29 per cent to $54.5 billion. A key indicator of future stability is the commercial remaining performance obligation, which has risen by 99 per cent to $627 billion. This metric reflects the value of existing contracts and customers that the firm expects to earn over the coming years, suggesting a deepening of its recurring revenue base.
Artificial intelligence continues to be a dominant force within the business, with the AI segment growing at a blistering pace of 123 per cent year-on-year. This acceleration has pushed the annual run rate for the AI business past $37 billion. The broader technology sector has seen similar momentum, with peers like Amazon Web Services also reporting double-digit revenue growth and NVIDIA facing heavy institutional buying pressure.
Profitability metrics matched the top-line strength, with net income climbing 23 per cent to $31.8 billion. Earnings per share settled at $4.27, beating the market consensus estimate of $4.06. The company maintained a strong liquidity position, concluding the quarter with $32 billion in cash and cash equivalents.
Capital management remained a priority for the firm, which returned $10.2 billion to shareholders through a combination of dividends and share repurchases. This approach underscores the company's confidence in its cash generation capabilities while providing support to its investor base.
Following the release of the results, billionaire investor George Soros has identified Microsoft as one of the best stocks to purchase in 2026. While the firm acknowledges the investment potential of its diversified portfolio, including Windows and Office, the market focus remains heavily weighted toward its cloud and AI infrastructure capabilities.
