This ranking evaluates how Fortune 500 companies are deploying AI, and how technology leaders value those investments relative to industry peers.

Fortune AIQ 75

The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

America's Most Innovative Companies

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

Fortune AIQ 50

The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

These 50 companies exemplify the innovation, progress, and potential of AI.

AI Innovators 2025-Microsoft

Fortune 50 AI Innovators

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are computers, internet services, IT services, semiconductors, and software companies.

Fortune Sector Leaders: Technology

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 200 companies on this list are transforming industries from the inside out.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

WMA 2024-Microsoft

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

WMAC 2023-Microsoft

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

G500-2023-Microsoft

The software, cloud services, and gaming giant has become a trailblazer in artificial intelligence. Meanwhile, its productivity apps and services and other products continue to generate huge profits; Microsoft earned $72.7 billion in 2022, second only to Apple among U.S. Fortune 500 companies. 
<ul> 
 	<li>In January 2023, Microsoft announced that it was making a new $10 billion investment in its longtime partner OpenAI, the creator of ChatGPT. Early products emerging from that partnership include an A.I. assistant to Microsoft 365 apps and services, known as Copilot, and its Bing GPT-4 chatbot.</li> 
 	<li>Even as it announced A.I. advances, Microsoft drew criticism for laying off a team that worked on ensuring ethical outcomes for the technology. Microsoft let the team go as part of a 10,000-employee culling in March 2023. Microsoft said at the time that it was just one of the company’s ethics teams, and that its product teams all had staffers now who “are accountable for ensuring we put our A.I. principles into practice.”</li> 
 	<li>In April 2023, the U.K.’s Competition and Markets Authority blocked Microsoft’s $69 billion acquisition of video-game maker Activision Blizzard, a deal first announced in January 2022. Microsoft has appealed the ruling. The company took a step closer to the merger in July 2023 when a U.S. court ruled against the Federal Trade Commission's efforts to block the deal.</li> 
</ul>

The essential guide to a sector that’s now attracting one out of every four startup investment dollars.

AI-Innovators-2023-Microsoft

While OpenAI deserves the credit for having created ChatGPT, it wouldn't have happened without billions of dollars in investment from Microsoft. The tech giant has committed a reported $13 billion to OpenAI so far and it has built one of the world's largest supercomputing clusters to help OpenAI train its ever-larger, more capable AI models. Microsoft’s Bing Chat, a chatbot and search engine, was built with models from OpenAI, and since its debut, users engaged in over a billion chats with the bot and generated more than a billion images with Bing Image Creator, which uses AI to turn user prompts into images. What Bing hasn't done, however, is move the needle on Microsoft's searh business: Bing remains stuck at about 3% of the global search market, compared to Google's 91%. But for Microsoft, the more important wins from generative AI have been in its Cloud business. Here, Microsoft's ability to offer OpenAI's technology to its Azure cloud customers has helped the tech giant turns in sales and profit growth that has beaten Wall Street expectations, with generative AI accounting for about 3% of the growth in Cloud revenues in the quarter ended in September. Microsoft has also been implementing AI across its core business producitivity software products, from PowerPoint to Outlook, as well as adding products like GitHub Copilot, an AI-powered coding assistant.

The 300 companies on this list are transforming industries from the inside out.

Fortune collaborated with the Diligent Institute to rank the most innovative boards of directors among S&P 500.

Modern Board 2023-Microsoft

After reaching the top spot on last year’s Modern Board 25 ranking, Microsoft has taken a steep tumble but still makes an appearance given its commitment to ESG and board expertise. Its movement on the former includes a push to be carbon negative by 2030, remove historical emissions, and build a “planetary computer” to measure, monitor, and model environmental data. The 12-member board, almost all of whom are independent, includes CEO Satya Nadella, who has been with Microsoft since the early ’90s and previously served as executive vice president of Microsoft’s cloud and enterprise group. Other CEO directors include Wells Fargo’s Charles Scharf, Padmasree Warrior of social reading platform Fable Group, and Emma Walmsley of biopharmaceutical company GSK. In April, The U.K.’s antitrust watchdog vetoed Microsoft’s $69 billion bid to acquire gaming company Activision Blizzard. The company plans to appeal, but a remedy will take time.

Fortune Modern Board 25

The companies on this list are mobilizing the creative tools of capitalism to help solve social problems.

CTW 2023-Microsoft

Only 11% of Indians speak English, the language of the country’s government, while only 57% speak Hindi. That leaves hundreds of millions who speak neither of those languages without good access to information about government services. Microsoft is deploying AI to help: In May, it partnered with local research lab AI4Bharat to create Jugalbandi, a chatbot that combines text-to-speech, translation, and generative AI to give rural Indians access to public services, like university scholarship applications or financial assistance programs, in their own language. The service, which people communicate with through WhatsApp, uses GPT models housed on Microsoft’s Azure OpenAI Service to process questions and uncover information. Jugalbandi is just one way Microsoft hopes to use AI to tackle India’s social issues—and what works in India, with all its complexity, could work globally as well.

Change the World

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500 2023-Microsoft

The software, cloud services, and gaming giant has become a trailblazer in artificial intelligence. Meanwhile, its productivity apps and services and other products continue to generate huge profits; Microsoft earned $72.7 billion in 2022, second only to Apple on the Fortune 500. 
<ul> 
 	<li>In January 2023, Microsoft announced that it was making a new $10 billion investment in its longtime partner OpenAI, the creator of ChatGPT. Early products emerging from that partnership include an A.I. assistant to Microsoft 365 apps and services, known as Copilot, and its Bing GPT-4 chatbot.</li> 
 	<li>Even as it announced A.I. advances, Microsoft drew criticism for laying off a team that worked on ensuring ethical outcomes for the technology. Microsoft let the team go as part of a 10,000-employee culling in March 2023. Microsoft said at the time that it was just one of the company’s ethics teams, and that its product teams all had staffers now who “are accountable for ensuring we put our A.I. principles into practice.”</li> 
 	<li>In April 2023, the U.K.’s Competition and Markets Authority blocked Microsoft’s $69 billion acquisition of video-game maker Activision Blizzard, a deal first announced in January 2022. Microsoft has appealed the ruling.</li> 
</ul>

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

WMAC-2022-03-Microsoft

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

G500 2022-33-Microsoft

Microsoft posted a robust 38% increase in profits last year—earning $61 billion as revenue rose 17.5% to $168 billion. But it wasn’t all smooth sailing. The company’s hardware teams coped with a global chip crisis that led to a shortage of Xbox game consoles, but reveled in successes with the release of new Surface laptops and tablet devices. Its software divisions took some lumps, including a disappointing release of Windows 11 (fewer than 1% of 10 million PCs surveyed by IT firm Lansweeper upgraded to the new system) and an early 2021 cybersecurity attack involving Microsoft’s Exchange email software that affected tens of thousands of customers. On the geopolitical front, Microsoft pulled its LinkedIn social platform from China in October 2021 after facing increased content restrictions from the government. In March 2021, the company unveiled its virtual reality platform Microsoft Mesh; it later won a $22 billion contract to supply U.S. Army combat troops with augmented reality headsets. Microsoft took its place in the stock market record books in June 2021, when it became only the second company in U.S. history, after Apple, to reach a $2 trillion market valuation.

Modern Boards 2022 Microsoft

Microsoft has been one of the top-performing companies in tech (or in any sector) for several years running. It also earns the top spot on our inaugural Modern Board 25, thanks to high marks in gender equality, board independence, board expertise, and ESG. <a href="https://news.microsoft.com/leadership/?section=board-members">Eight of its 12 board members</a> and three out of four committee chairs represent gender or ethnic diversity, which studies have shown correlates with stronger company performance and a greater ability to handle emerging business challenges.  
 
Microsoft’s lead independent director is John W. Thompson, former CEO of Virtual Instruments and Symantec, and one of the most prominent Black executives in tech. After joining the board in 2012, Thompson succeeded Microsoft founder Bill Gates as chairman in 2014 and held that role until 2021. Gates left Microsoft’s board in March 2020.  
 
Reid Hoffman, angel investor and cofounder of LinkedIn, joined the board in 2017 after Microsoft bought his company for $26 billion in 2016. Microsoft’s board also boasts former U.S. secretary of commerce Penny Pritzker, and the former worldwide chairman for Johnson &amp; Johnson, Sandra Peterson. The current CEOs of GlaxoSmithKline, ADP, and Wells Fargo are also directors. Padmasree Warrior, former CTO of Cisco, and two CFOs round out the group, along with CEO Satya Nadella, who was named chairman in 2021. 
 
Some governance experts consider having the CEO serve as board chairman to be suboptimal, but as Thompson explained in a <a href="https://www.cnbc.com/2021/07/07/microsoft-lead-director-ceo-satya-nadella-earned-right-to-be-chair.html">recent interview</a>, Nadella has earned the role of chairman because of the company’s exceptional performance under his watch; since Nadella became CEO in 2014, the company has seen major growth in cloud services and video gaming while remaining dominant in productivity software. Microsoft is one of only a handful of U.S. companies to have exceeded a $1 trillion market capitalization; after briefly dipping below $150 at the beginning of the COVID-19 outbreak in North America, its share price has been over $300 for most of 2022.   
 
Microsoft made headlines in early 2022 with its proposed acquisition of Activision Blizzard, a gaming company embroiled in numerous scandals involving its allegedly toxic work environment. Microsoft’s board and C-suite leaders will face a major challenge as they seek to reshape the acquired company’s culture.

This year’s Fortune 500 marks the 68th running of the list.

F500 2022 Microsoft

Microsoft posted a robust 38% increase in profits last year—earning $61 billion, the fourth-largest sum among Fortune 500 companies—as revenue rose 17.5% to $168 billion. But it wasn’t all smooth sailing. The company’s hardware teams coped with a global chip crisis that led to a shortage of Xbox game consoles, but reveled in successes with the release of new Surface laptops and tablet devices. Its software divisions took some lumps, including a disappointing release of Windows 11 (fewer than 1% of 10 million PCs surveyed by IT firm Lansweeper upgraded to the new system) and an early 2021 cybersecurity attack involving Microsoft’s Exchange email software that affected tens of thousands of customers. On the geopolitical front, Microsoft pulled its LinkedIn social platform from China in October 2021 after facing increased content restrictions from the government. In March 2021, the company unveiled its virtual reality platform Microsoft Mesh; it later won a $22 billion contract to supply U.S. Army combat troops with augmented reality headsets. Microsoft took its place in the stock-market record books in June 2021, when it became only the second company in U.S. history, after Apple, to reach a $2 trillion market valuation.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

WMAC-2021-03-Microsoft

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500-2021-033-Microsoft

While many Big Tech companies faced withering criticism last year for their behavior, Microsoft largely escaped scrutiny. That may be because CEO Satya Nadella has built a collection of complementary parts that perform exceptionally without being the dominant player in any new market. Microsoft’s Azure cloud service, part of the cloud business that increased revenue 34% in the calendar fourth quarter of 2020, trails Amazon. And even as it lags Sony in gaming, Microsoft’s gaming unit saw revenue jump 51% in the holiday quarter with the release of the new Xbox Series X and S. Microsoft still leads its category with the old Windows PC software business, but its PC hardware sales rank outside the top five, and in mobile phones Microsoft is just another app developer. All of this meant that Microsoft was left out of the U.S. House antitrust subcommittee's 450-page report that targeted Apple, Amazon, Facebook, and Google. Sure, there was a complaint in Europe by Slack, alleging that Microsoft had unfairly helped its Teams app. But no one’s seeking to break up the tech giant or undo its acquisitions—at least not for the moment.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-15-Microsoft

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-047-Microsoft

Microsoft jumps 13 spots on this year's Global 500. In the company's fiscal 2019, overall sales soared 14% year-over-year, to $125.8 billion, and the Redmond, Wash., giant churned out $39 billion in profits to boot. Last fall, Microsoft won a coveted cloud-computing contract with the Pentagon worth up to $10 billion, a deal that would help solidify the company's reputation as a leading cloud vendor. (That deal is on hold and under review, however, after rival bidder Amazon raised questions about the bidding process.) So far in 2020, a surge in remote working, as a result of the coronavirus pandemic, has led to even greater demand for the company’s Azure cloud service and its Office 365 workplace apps.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-021-Microsoft

Microsoft reached its highest ranking ever on the Fortune 500, up five spots from last year, and churned out $39 billion in profits to boot. In Microsoft’s fiscal 2019, overall sales soared 14% year-over-year, to $125.8 billion. Last fall, the software titan won a coveted cloud-computing contract with the Pentagon worth up to $10 billion, a deal that would help solidify Microsoft’s reputation as a leading cloud vendor. (That deal is on hold and under review, however, after rival bidder Amazon raised questions about the bidding process.) So far in 2020, a surge in remote working as a result of the coronavirus pandemic has led to even greater demand for the company’s Azure cloud service and its Office 365 workplace apps. Microsoft’s shares hit an all-time high in February at nearly $189, underscoring Wall Street’s enthusiasm for the company's evolution under CEO Satya Nadella.

As we face unprecedented collective challenges, cooperation has become a business superpower.

16.CTW20.Microsoft

Microsoft started off 2020 with a startling announcement: By 2030, the software titan aims to be not just carbon neutral, but carbon negative. By 2050, Microsoft says, it will have negated all of its carbon emissions since its 1975 founding. (Pictured here: Microsoft president Brad Smith, chief financial officer Amy Hood and CEO Satya Nadella on the day of the announcement, Jan. 15, 2020.) 
 
The company is tackling nearer-term crises too. When the world’s focus shifted to the coronavirus, Microsoft responded by offering 25 million people free online training in digital skills such as data analytics, IT, and cybersecurity. It represented a vital lifeline to those whose jobs may never come back—and in particular for women and minorities, who have been hit hardest financially by the pandemic. 
 
That short-term offering is part of a much broader Microsoft upskilling effort. In Africa, for instance, Microsoft’s 4Afrika initiative has established training programs to address the continent’s digital skills gap. It’s a good deed, but it isn’t charity: Microsoft sees Africa as a growth market, and 4Afrika is busy signing up customers and spotting new business ideas.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here’s our look at 57 companies that do well by doing good.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here’s our look at 50 companies that do well by doing good.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Google tops the list once again, marking its eighth appearance and fifth time as No. 1.

Fortune 100 Best Companies to Work For

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Change The World

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Routinely ranked as one of the world’s most valuable companies by market capitalization, the software giant makes the popular Windows PC operating system and the Microsoft 365 suite of business productivity software. It also runs the Microsoft Azure cloud computing service, and owns the Xbox gaming platform, the code repository GitHub, and the professional social network LinkedIn. Cofounded by Bill Gates in 1975, Microsoft operates data centers around the globe to support its cloud computing services. In recent years, Microsoft has been at the forefront of the generative AI revolution through its partnership with OpenAI, its Copilot-branded AI applications, and its own AI models produced in-house.

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Microsoft (MSFT): Company Profile, Stock Price, News, Rankings

legacy

Microsoft

microsoft

Greetings and welcome to the Microsoft fiscal year 2026 first quarter earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jonathan Neilson, Vice President of Investor Relations. Please go ahead.

Good afternoon and thank you for joining us today. On the call with me are Satya Nadella, Chairman and Chief Executive Officer, Amy Hood, Chief Financial Officer, Alice Jolla, Chief Accounting Officer, and Keith Dolliver, Corporate Secretary and Deputy General Counsel. On the Microsoft Investor Relations website, we will provide an earnings press release and financial summary slide deck, which is intended to supplement our prepared remarks and provide the reconciliation of differences between GAAP and non-GAAP financial measures. More detailed Outlook slides will be available on the Microsoft Investor Relations website. On this call, we will discuss certain non-GAAP items. The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP.

They are included as additional clarifying items to aid investors in further understanding the company's first quarter performance, in addition to the impact these items and events have on the financial results. All growth comparisons we make on the call today relate to the corresponding period of last year unless otherwise noted. We will also provide growth rates in constant currency, when available, as a framework for assessing how our underlying business performed, excluding the effect of foreign currency rate fluctuations. Where growth rates are the same in constant currency, we will refer to the growth rate only. We will post our prepared remarks to our website. Today's call is being recorded. If you ask a question, it will be included in our live transmission, in the transcript, and in any future use of the recording.

You can replay the call and view the transcript on the Microsoft Investor Relations website. During this call, we will be making forward-looking statements, which are predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ because of factors discussed in today's earnings press release, in the comments made in this conference call, and in the risk factor section of our Form 10-K, Forms 10-Q, and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements. With that, I'll turn the call over to Satya.

Thank you, Jonathan. It was a very strong start to our fiscal year. Microsoft Cloud revenue surpassed $49 billion, up 26% year-over-year, and our commercial RPO increased over 50% to nearly $400 billion with a weighted average duration of only two years. We are seeing increasing demand and diffusion of our AI platform and family of Copilots, which is fueling our investments across both capital and talent. When it comes to infrastructure, we're building a planet-scale cloud and an AI factory, maximizing tokens per dollar per watt while supporting the sovereignty needs of customers and countries. We're innovating rapidly across the family of Copilots, spanning the high-value domains of information work, coding, security, science, health, and consumer.

As you saw yesterday, we closed a new definitive agreement with OpenAI, marking the next chapter in what is one of the most successful partnerships and investments our industry has ever seen. This is a great milestone for both companies, and we continue to benefit mutually from each other's growth across multiple dimensions. Already, we have roughly 10x our investment. OpenAI has contracted an incremental $250 billion of Azure services. Our rev share, exclusive IP rights, and API exclusivity for Azure continue until AGI or through 2030, and we have extended the model and product IP rights through 2032. We are also energized to innovate and pursue AI advancements with both talent and compute investments that have real-world impact. With that, let's turn to our momentum across our AI platform and Copilots, as well as with agents.

We have the most expansive data center fleet for the AI era, and we are adding capacity at an unprecedented scale. We will increase our total AI capacity by over 80% this year and roughly double our total data center footprint over the next two years, reflecting the demand signals we see. Just this quarter, we announced the world's most powerful AI data center, Fairwater in Wisconsin, which will go online next year and scale to 2 GW alone. We have deployed the world's first large-scale cluster of NVIDIA GB300s. We are building a fungible, global fleet that's being continuously modernized and spans all stages of the AI lifecycle, from pre-training to post-training to synthetic data generation and inference. It also goes beyond Gen AI workloads to recommendation engines, databases, and streaming. We're optimizing this fleet across silicon, systems, and software to maximize performance and efficiency.

It's this combination of fungibility and continuous optimization that allows us to deliver the best ROI and TCO for us and our customers. For example, during the quarter, we increased the token throughput for GPT-4.1 and GPT-5, two of the most widely used models, by over 30% per GPU. We also have the most comprehensive digital sovereignty platform. Azure customers in 33 countries are now developing their own cloud and AI capabilities within their borders to meet local data residency requirements. In Germany, for example, OpenAI and SAP will rely on Azure to deliver new AI solutions to the public sector. On top of this infrastructure, we're building Azure AI Foundry to help customers build their own AI apps and agents. We have 80,000 customers, including 80% of the Fortune 500.

We offer developers and enterprise access to over 11,000 models, more than any other vendor, including, as of this quarter, OpenAI's GPT-5, as well as xAI's Grok 4. For example, Ralph Lauren used Foundry to build a conversational shopping experience in its app, enabling customers to describe what they're looking for and get personalized recommendations. Open Evidence used Foundry to create its AI-powered clinical assistant, which surfaces relevant medical information to physicians and helps streamline charting. When it comes to our first-party models, we're excited by the performance of our new MAI models for text, voice, and image generation, which debuted among the top in the industry leaderboards. We continue to make great progress with our Phi family of SLMs, which now have been downloaded over 60 million times, up 3x YoY.

Beyond models in Foundry, we are providing everything developers need to design, customize, and manage AI applications and agents at scale. Our new Microsoft Agent Framework helps developers orchestrate multi-agent systems with compliance, observability, and deep integration out of the box. For example, KPMG used the framework to modernize the audit process, connecting agents to internal data with enterprise-grade governance and observability. These kinds of real production-scale AI deployments are driving Azure's overall growth, and once again, this quarter, Azure took share. Now let's turn to applications and agents we ourselves are building on this platform. We now have 900 million monthly active users of our AI features across our products. Our first-party family of Copilots now has surpassed 150 million monthly active users across information work, coding, security, science, health, and consumer. When it comes to information work, we continue to innovate with Microsoft 365 Copilot.

Copilot is becoming the UI for the Agentic AI experience. We have integrated chat and Agentic workflows into everyday tools like Outlook, Word, Excel, PowerPoint, and Teams. Just nine months since release, tens of millions of users across the Microsoft 365 customer base are already using chat. Adoption is accelerating rapidly, growing 50% quarter-over-quarter, and we continue to see usage intensity increase. This quarter, we also introduced Agent Mode, which turns single prompts into expert-quality Word documents, Excel spreadsheets, PowerPoint presentations, and then iterates to deliver the final product, much like Agent Mode in coding tools today. We're thrilled by the early response, including third-party benchmarks that rank it best in class. Beyond individual productivity, Copilot is multiplayer with Teams Mode announced this week.

You can now invite colleagues into a Copilot conversation, and our collaborative agents like Facilitator and Project Manager prep meeting agendas, take notes, capture decisions, and kick off group tasks. We are seeing a growing Copilot agent ecosystem with top ISVs like Adobe, Asana, Jira, LexisNexis, SAP, ServiceNow, Snowflake, and Workday all building their own agents that connect to Copilot. Customers are also building agents for their mission-critical business processes and workflows using tools like Copilot Studio and integrating them into Copilot. The overall number of agent users doubled quarter-over-quarter, and just yesterday, we announced App Builder, a new Copilot agent that lets anyone create and deploy task-specific apps and agents in minutes grounded in Microsoft 365 context. All this innovation is driving our momentum. Customers continue to adopt Microsoft 365 Copilot at a faster rate than any other new Microsoft 365 suite.

All up, more than 90% of the Fortune 500 now use Microsoft 365 Copilot. Accenture, Bristol-Myers Squibb, EY Global, and the U.K.'s Tax and Payment and Customs Authority all purchased over 15,000 seats this quarter. Lloyd’s Banking Group has deployed 30,000 seats, saving each employee an average of 46 minutes daily. A large majority of our enterprise customers continue to come back to purchase more seats. Our partner, PwC, alone added 155,000 seats this quarter and now has over 200,000 deployed across its global operations. In just six months, PwC employees interacted with Microsoft 365 Copilot over 30 million times, and they credit this agentic transformation with saving millions of hours in employee productivity. When it comes to coding, GitHub Copilot is the most popular AI pair programmer now with over 26 million users.

For example, tens of thousands of developers at AMD use GitHub Copilot, accepting hundreds of thousands of lines of code suggestions each month and crediting it with saving months of development time. All up, GitHub is now home to over 180 million developers, and the platform is growing at the fastest rate in its history, adding a developer every second. 80% of new developers on GitHub start with Copilot within the first week. Overall, the rise of AI coding agents is driving record usage with over 500 million pull requests merged over the past year. Just yesterday at GitHub Universe, we introduced Agent HQ. GitHub Copilot and Agent HQ are the organizing layer for all coding agents, extending the GitHub primitives like PRs, issues, and actions to coding agents from OpenAI, Anthropic, Google, Cognition, xAI, as well as OSS and in-house models.

GitHub now provides a single mission control to launch, manage, and review these agents, each operating from its own branch with built-in controls, observability, and governance. We're building a similar system in security with over three dozen agents in Copilot integrated across Entra, Defender, Purview, and Intune. For example, with our phishing triage agent in Defender, studies show that analysts can be up to 6.5 times more efficient in detecting malicious mails. In health, Dragon Copilot helps providers automate critical workflows. This quarter alone, we helped document over 17 million patient encounters, up nearly 5x year-over-year. More than 650 healthcare organizations have purchased our ambient listening tech to date, including University of Michigan Health, where over 1,000 physicians are actively using it. Finally, when it comes to AI consumer experiences, we are excited about all the progress Copilot is making, starting with Windows.

Every Windows 11 PC now is an AI PC. Two weeks ago, we introduced new ways to speak naturally to your computer, including a Copilot wake word. With Vision, Copilot sees what you see on your screen, and you can have a real-time conversation about it. With Action, it takes real action on your behalf, interacting with both web and desktop apps. In Edge, we are introducing first-of-its-kind AI features to automate multi-step workflows within the browser and help you pick up right where you left off. Edge now has taken share for 18 consecutive quarters. In Bing, our overview pages now include embedded conversational capabilities. We took share again in search. Daily users of our Copilot consumer app increased nearly 50% quarter-over-quarter. Among many updates we made last week is Groups, which turns Copilot for the first time into a shared experience.

We also are creating a great consumer subscription offer with Microsoft 365 Premium. It brings together our Office applications and advanced Copilot features with high usage limits, giving individuals the flexibility to bring their own AI to work in a secure way. Finally, in gaming, Copilot provides a voice-first immersive experience across PC, mobile, and our new Xbox Ally. Beyond our family of Copilots and AI platform, we are seeing strong momentum across the portfolio. Cloud migrations are accelerating. In data and analytics, Fabric revenue grew 60%, which is faster than any other data and analytics platform in the industry. We now have 28,000 paid Fabric customers. In databases, SQL DB hyperscale revenue was up nearly 75%, 50% in Cosmos DB. In business applications, Dynamics 365 gained share.

In security, our end-to-end stack is now informed by 100 trillion daily signals, 1 billion monthly active users of Entra, 16 billion Copilot interactions audited by Purview, up 72% quarter-over-quarter, 40,000 Sentinel customers. We took share across all categories we serve in security. In LinkedIn, nearly 1.3 billion members. In gaming, we expanded our reach across every endpoint focused on our high-margin content and services. We launched critically acclaimed games like Keeper, Ninja Gaiden 4, and Outer Worlds 2, reaching 155 million monthly active users in Minecraft, an all-time high, and set new records for overall content and services revenue for the quarter. We also saw a great response to Xbox Ally launch two weeks ago and set new records for players on PC. In closing, our planet-scale cloud and AI factory, together with Copilots across high-value domains, is driving broad diffusion and real-world impact.

We continue to increase our investments in AI across both capital and talent to meet the massive opportunity ahead. With that, let me turn it over to Amy to walk through our financial results and outlook. I look forward to rejoining for your questions.

Thank you, Satya, and good afternoon, everyone. First, as you heard from Satya, we were pleased to announce the next phase of our partnership with OpenAI yesterday. They continue to choose Microsoft to power their workloads, and together, we remain committed to driving innovation that meets real-world needs. Our Q1 results were not impacted by the deal signed this week. Now, on to the quarter. We delivered a strong start to our fiscal year, exceeding expectations across revenue, operating income, and earnings per share. We also saw continued share gains across many of our businesses, demonstrating our leadership position in key markets. This quarter, revenue was $77.7 billion, up 18% and 17% in constant currency. Gross margin dollars increased 18% and 16% in constant currency, while operating income increased 24% and 22% in constant currency.

Earnings per share was $4.13, an increase of 23% and 21% in constant currency when adjusted for the impact of our investments in OpenAI. FX impact was roughly in line with guidance. Company gross margin percentage was 69%, down slightly year-over-year, driven by investments in AI, including the impact of scaling our AI infrastructure and the growing usage of our AI product features. This was partially offset by ongoing efficiency gains, particularly in Azure and M365 commercial cloud. Operating expenses increased 5% and 4% in constant currency, driven by investments in cloud and AI engineering, including compute capacity and AI talent to support product development across the portfolio. Operating margins increased year-over-year to 49% and were ahead of expectations with stronger than anticipated results in high-margin businesses this quarter.

When adjusted for the impact from our investments in OpenAI, other income and expense was $401 million, as interest income more than offset interest expense, which includes the interest payments related to data center finance leases. Capital expenditures were $34.9 billion, driven by growing demand for our cloud and AI offerings. This quarter, roughly half of our spend was on short-lived assets, primarily GPUs and CPUs, to support increasing Azure platform demand, growing first-party apps and AI solutions, accelerating R&D by our product teams, as well as continued replacement for end-of-life server and networking equipment. The remaining spend was for long-lived assets that will support monetization for the next 15 years and beyond, including $11.1 billion of finance leases that are primarily for large data center sites. Cash paid for PP&E was $19.4 billion.

As a reminder, the difference between total CapEx and cash paid for PP&E is primarily due to finance leases, as well as the normal timing of goods received but not yet paid. Cash flow from operations was $45.1 billion, up 32%, driven by strong cloud billings and collections, partially offset by higher supplier payments. Free cash flow increased 33% to $25.7 billion, with minimal impact from a sequential increase in CapEx, given the higher mix of finance leases. Finally, we returned $10.7 billion to shareholders through dividends and share repurchases. Now to our commercial results. Commercial bookings increased 112% and 111% in constant currency and were significantly ahead of expectations, driven by Azure commitments from OpenAI, as well as continued growth in the number of $100 million+ contracts for both Azure and M365.

These results do not include any impact from the incremental $250 billion Azure commitments from OpenAI announced yesterday. Commercial remaining performance obligation increased to $392 billion and was up 51% year-over-year. The balance has nearly doubled over the past two years. Even with this growth, our weighted average duration has been relatively stable at approximately two years. Microsoft Cloud revenue was $49.1 billion ahead of expectations and grew 26% and 25% in constant currency. Microsoft Cloud gross margin percentage was slightly better than expected at 68% and down year-over-year due to the investments in AI that were partially offset by ongoing efficiency gains, as noted earlier. Now to segment results. Revenue from Productivity and Business Processes was $33 billion and grew 17% and 14% in constant currency.

M365 commercial cloud revenue increased 17% and 15% in constant currency, with one point of benefit from end-period revenue recognition. year-over-year growth was driven by both ARPU and seats, with ARPU growth again led by E5 and M365 Copilot. Paid M365 commercial seats grew 6% year-over-year, with installed base expansion across all customer segments, though primarily in our small and medium businesses and frontline worker offerings. M365 commercial products revenue increased 17% and 14% in constant currency ahead of expectations due to higher than expected Office 2024 transactional purchasing. M365 consumer cloud revenue increased 26% and 25% in constant currency, again driven by ARPU growth. M365 consumer subscriptions grew 7% to over 90 million. LinkedIn revenue increased 10% and 9% in constant currency, driven by marketing solutions. The talent solutions business was impacted by continued weakness in the hiring market.

Dynamics 365 revenue increased 18% and 16% in constant currency, with continued growth across all workloads. Segment gross margin dollars increased 19% and 16% in constant currency, and gross margin percentage increased, driven by efficiency gains in M365 commercial cloud that were partially offset by investments in AI, including the impact of growing usage in M365 Copilot chat. Operating expenses increased 6% and 5% in constant currency, and operating income increased 24% and 20% in constant currency. Operating margins increased three points year-over-year to 62%, driven by the higher gross margin noted earlier, as well as improved operating leverage. Next, the Intelligent Cloud segment. Revenue was $30.9 billion and grew 28% and 27% in constant currency. In Azure and other cloud services, where we continue to see accelerating demand, revenue grew 40% and 39% in constant currency.

Results were ahead of expectations, driven by better than expected growth in our core infrastructure business, primarily from our largest customers. Azure AI services revenue was generally in line with expectations, and this quarter, demand again exceeded supply across workloads, even as we brought more capacity online. In our on-premise server business, revenue increased 1% and was relatively unchanged in constant currency. Results were ahead of expectations, driven by transactional purchasing of Windows Server 2025. Segment gross margin dollars increased 20% and 19% in constant currency, and gross margin percentage decreased year-over-year, driven by investments in AI that were partially offset by efficiency gains in Azure. Operating expenses increased 4% and operating income grew 27%. Operating margins were 43%, down only slightly year-over-year, as increased investments in AI were mostly offset by improved operating leverage. Now to More Personal Computing.

Revenue was $13.8 billion and grew 4%. Windows OEM and devices revenue increased 6% year-over-year, significantly ahead of expectations, driven by strong demand ahead of Windows 10 end of support, as well as a benefit from inventory levels that remain elevated. Search and news advertising revenue ex-TAC increased 16% and 15% in constant currency, driven by growth in volume, as well as a continued benefit from third-party partnerships that was better than expected. In gaming, revenue decreased 2% and 3% in constant currency. Against a strong prior year comparable, Xbox content and services revenue increased 1% and was relatively unchanged in constant currency, driven by better than expected performance from third-party content. Segment gross margin dollars increased 11% and 10% in constant currency, and gross margin percentage increased year-over-year, driven by sales mix shift to higher margin businesses.

Operating expenses increased 4% and 3% in constant currency, and operating income increased 18% and 16% in constant currency. Operating margins increased three points year-over-year to 30%, driven by the higher gross margin noted earlier. Now, moving to our Q2 outlook, which, unless specifically noted otherwise, is on a U.S. dollar basis. Based on current rates, we expect FX to increase total revenue growth by two points. Within the segments, we expect FX to increase revenue growth by two points in Productivity and Business Processes and Intelligent Cloud, and one point in More Personal Computing. We expect FX to increase COGS and operating expense growth by one point. Starting with the total company, we expect revenue of $79.5 billion-$80.6 billion, or growth of 14%-16%. We expect COGS of $26.35 billion-$26.55 billion

or growth of 21%-22%, and operating expense of $17.3 billion-$17.4 billion, or growth of 7%-8%. Operating margins should be relatively flat year-over-year and down sequentially, aligned with historic seasonality. Now, other income and expense. The combination of OpenAI's conversion to a public benefit corp and the ongoing nature of our partnership will result in increased volatility. Therefore, going forward, we'll provide our outlook excluding any impact from our investments in OpenAI. On that basis, in Q2, other income and expense is estimated to be roughly $100 million, as interest income will more than offset interest expense. We expect our Q2 effective tax rate to be approximately 19%. Next, capital expenditures. With accelerating demand and a growing RPO balance, we're increasing our spend on GPUs and CPUs.

Therefore, total spend will increase sequentially, and we now expect the FY 2026 growth rate to be higher than FY 2025. As a reminder, there can be quarterly spend variability from cloud infrastructure buildouts and the timing of delivery of finance leases. Next, our commercial business. In commercial bookings, we expect healthy growth in the core business on a low expiry base, when adjusted for the OpenAI contracts in the prior year. We expect commercial bookings will be positively impacted by the significant OpenAI commitments announced yesterday. As a reminder, larger long-term Azure contracts, which are more unpredictable in their timing, drive increased quarterly volatility in our bookings growth rate. Microsoft Cloud gross margin percentage should be roughly 66%, down year-over-year, driven by the continued investments in AI, as well as the mix shift to Azure. Now to segment guidance.

In Productivity and Business Processes, we expect revenue of $33.3 billion-$33.6 billion, or growth of 13%-14%. In M365 commercial cloud, we expect revenue growth to be between 13% and 14% in constant currency, with business trends that remain relatively stable quarter-over-quarter. ARPU growth will again be driven by E5 and M365 Copilot. M365 commercial products revenue growth should be in the low to mid-single digits. As a reminder, M365 commercial products include components that can be variable due to the end-period revenue recognition dynamics. M365 consumer cloud revenue growth should be in the mid-20s, driven by growth in ARPU. For LinkedIn, we expect revenue growth of approximately 10%. In Dynamics 365, we expect revenue growth to be in the mid to high teens, with continued growth across all workloads.

For Intelligent Cloud, we expect revenue of $32.25 billion-$32.55 billion, or growth of 26%-27%. In Azure, we expect Q2 revenue growth of approximately 37% in constant currency, as demand remains significantly ahead of the capacity we have available. While we're accelerating the amount of capacity we're bringing online, we will continue to balance Azure revenue growth with the growing needs across our first-party apps and AI solutions, our own R&D efforts, and the end-of-life server replacements. Therefore, we now expect to be capacity-constrained through at least the end of our fiscal year. As a reminder, there can be quarterly variability in the year-over-year growth rates, depending on the timing of capacity delivery and when it comes online, as well as from end-period revenue recognition, depending on the mix of contracts.

In our on-premises server business, we expect revenue to decline in the low to mid-single digits, with ongoing customers' shift to cloud offerings. In More Personal Computing, we expect revenue to be in the $13.95 billion-$14.45 billion. Windows OEM and Devices revenue should decline in the mid-single digits. We expect continued momentum from Windows 10 end of support, although growth rates will be impacted by elevated inventory levels at the end of Q1 that we expect to come down through the quarter. Therefore, Windows OEM revenue should decline in the low to mid-single digits. The range of potential outcomes remains wider than normal. Devices revenue should decline year-over-year. Search and news advertising ex-TAC revenue growth should be in the low double digits, down sequentially as growth rates normalize, following the benefit from third-party partnerships noted earlier.

Growth will continue to be driven by volume and revenue per search across Edge and Bing. In Xbox content and services, we expect revenue to decline in the low to mid-single digits against a prior year comparable that benefited from strong first-party performance, partially offset by growth in subscriptions. Hardware revenue should decline year-over-year. In closing, demand signals across bookings, RPO, and product usage are accelerating faster than we expected. We're investing in infrastructure, AI talent, and product innovation to capture that momentum and expand our leadership position. We remain focused on delivering real value to our customers that results in durable revenue growth for the long term. With that, let's go to Q&A, Jonathan.

Thanks, Amy. We'll now move over to Q&A. Out of respect for others on the call, we request that participants please only ask one question. Operator, can you please repeat your instructions?

Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys. Our first question comes from the line of Keith Weiss with Morgan Stanley. Please proceed.

Excellent. Thank you guys for taking the question, and congratulations on another outstanding quarter. If I'm looking at Microsoft, this is two quarters in a row. We're really seeing results that are well ahead of anybody's expectations. When we were thinking about this company a year ago or five years ago, 111% commercial bookings growth was not on anybody's bingo card, if you will. Yet the stock is underperforming the broader market. The question I have is kind of getting at the zeitgeist that I think is weighing on the stock, and it's something about to change. I think AGI is kind of a nomenclature or a shorthand for that. It's something that's still included in your OpenAI agreement.

Satya, when we think about AGI or we think about how application and computing architectures are changing, is there anything that you see on the horizon, whether it's AGI or something else, that could potentially change what appears to be a really strong positioning for Microsoft in the marketplace today, or that strength will perhaps weaken on a go-forward basis? Is there anything that you're worrying about in that evolution, and particularly the evolution of these generative AI models?

No, thank you, Keith, for the question. Here's how I would say that I think there are two parts. We feel very, very good about even this, I would say, the new agreement that we now have with OpenAI, because I think even it just creates more certainty to all of the IP relationship we have as it relates to even this definition of AGI. Beyond that, I think your question touches on something that's pretty important, which is how are these AI systems going to truly be deployed in the real world and make a real difference and make a return for both the customers who are deploying them and obviously the providers of these systems?

I think the best way to characterize the situation is that even as the intelligence capability increases, let's even say exponentially, like model version over model version, the problem is it's always going to still be jagged. I think the term people use is the jagged intelligence, even it or spiky intelligence. You may even have a capability that's fantastic at a particular task, but it may not uniformly grow. What is required is, in fact, these systems, whether it is GitHub Agent HQ or the M365 Copilot system, don't think of this as a product. Think of it as a system that in some sense smooths out those jagged edges and really helps the capability. Just to give you a flavor for it, if I am in M365 Copilot, I can generate an Excel spreadsheet.

The good news is now an Excel spreadsheet does understand Office JS, has the formulas in it. It feels like, wow, it is a great spreadsheet created by a good modeler. The more interesting thing is I can go into agent mode in Excel and iterate on that model, and yet it'll stay on rails. It won't go off rails. It'll be able to do the iteration. Then I can even give it to the analyst agent, and then it'll even make sense of it like a data analyst would of an Excel model. The reason I say all of that is because that's the type of construction that'll be needed, even when the model is magical, all-powerful. I think we will be in this jagged intelligence phase for a long time.

One of the fundamental things that these, whether it's GitHub, whether it's security, whether it's M365, the three main domains we're in, we feel very, very good about building these as organizing layers for agents to help customers. By the way, that's the same thing that we're going to put into Foundry for our third-party customers. That's kind of how people will build these multi-agent systems. I feel actually pretty good about both the progress in AI. I don't think AGI, as defined at least by us in our contract, is ever going to be achieved anytime soon. I do believe we can drive a lot of value for customers with advances in AI models by building these systems. It's kind of the real question that needs to be well understood. I feel very, very confident about our ability to make progress.

Thanks, Keith. Operator, next question, please.

The next question comes from the line of Brent Thill with Jefferies. Please proceed.

Thanks. Amy, on the bookings blowout, I guess many are somewhat concerned about concentration risk. I think you noted a number of $100 million contracts. Not to go into a lot of detail, can you just give us a sense of what you're seeing on that 51% RPO and 110%+ bookings growth that gives you confidence about what you're seeing in terms of the breadth and extent of some of these deals on a global basis? Thanks.

Thanks, Brent. A couple of things to maybe take a step back on RPO. With a nearly $400 billion balance, we've been trying to help people understand sort of how to think about really the breadth of that. It covers numerous products. It covers customers of all sizes. That's been a balance that we've been growing, obviously, at a good clip. What people need to realize is it sits across multiple products because of the things Satya is talking about around creating systems and where we're investing. If you're going to have that type of balance, and then more importantly, have the weighted average duration be two years, it means that most of that is being consumed in relatively short order. People are not consuming, and I say this broadly, unless there's value.

I think this is why we keep coming back to are we creating real-world value in our AI platforms, in our AI solutions and apps and systems. I think the way to think about RPO is it's been building across a number of customers. We're thrilled to have OpenAI be a piece of that. We're learning a ton and building leading systems because of it that are being used at scale that benefits every other customer. It's why we've tried to give a little bit more color to that RPO balance, because I do understand that there have been a lot of concerns or questions about is it long-dated? Is it coming over a long period of time? Hopefully, this is helpful for people to realize that these are contracts being signed by customers who intend to use it in relatively short order.

At that type of scale, I think that's a pretty remarkable execution.

Thanks, Brent. Operator, next question, please.

The next question comes from the line of Mark Moerdler with Bernstein Research. Please proceed.

Thank you very much for taking my question, and congratulations on the quarter. It's pretty amazing what you guys are doing. Satya and Amy, I'd like to ask you the number one question I receive, whether from investors or at AI conferences I attend. How much confidence do you have that the software and even the consumer internet business can monetize all the investments we're seeing globally, or frankly, are we in a bubble? In fact, Amy, what would be the factors you'd be watching for to assure that you're not overbuilding for current demand and that demand will sustain? Thank you.

Maybe I'll start, Satya, and then you could add. Let me talk a little bit about maybe connecting a couple of the dots, because with $400 billion of RPO that's sort of short-dated, as we talked about, our needs to continue to build out the infrastructure are very high. That's for booked business today. That is not any new booked business we started trying to accomplish on October 1, right? The way to think about that, and you saw it this quarter in particular, and as we talked about 2026, the remainder. Number one, we're pivoting toward increasingly, we talked about this, short-lived assets, both GPUs and CPUs. Again, we talk about all these workloads are burning both in terms of app building. Now, when that happens, short-lived assets generally are done to match sort of the duration of the contracts or the duration of your expectation of those contracts.

I sometimes think when people think about risk, they're not realizing that most of the lifetimes of these and the lifetimes of the contracts are very similar. When you think about having revenue and the bookings and coming on the balance sheet and the depreciation of short-lived assets, they're actually quite matched, Mark. As you know, we have spent the past few years not actually being short GPUs and CPUs per se. We were short the space or the power, is the language we use to put them in. We spent a lot of time building out that infrastructure. Now we're continuing to do that, also using leases. Those are very long-lived assets, as we've talked about, 15-20 years. Over that period of time, do I have confidence that we'll need to use all of that? It is very high.

When I think about sort of balancing those things, seeing the pivot to GPU, CPU short-lived, seeing the pivot in terms of how those are being utilized, we are, and I said this now, we've been short now for many quarters. I thought we were going to catch up. We are not. Demand is increasing. It is not increasing in just one place. It is increasing across many places. We're seeing usage increases in products. We are seeing new products launch that are getting increasing usage, and increasing usage very quickly. When people see real value, they actually commit real usage. I sometimes think this is where this cycle needs to be thought through completely, is that when you see these kind of demand signals and we know we're behind, we do need to spend.

We're spending with a different amount of confidence in usage patterns and in bookings, and I feel very good about that. I have said we are now likely to be short capacity to serve the most important things we need to do, which is Azure, our first-party applications. We need to invest in product R&D, and we're doing end-of-life replacements in the fleet. We're going to spend to make sure that happens. It's about modernization, high quality, service delivery, and meeting demand. I feel good about doing that, and I feel good that we've been able to do it so efficiently and with a growing book of business behind it.

Yeah, the only thing I would add to what Amy captured was if you sort of look out, there are two things that matter, I think, and that are critical in terms of how we think about our allocation of capital, also our R&D. One is how efficient is our planet-scale token factory? I mean, that's at the end of the day what you have to do. In order to do that, you have to start with building out a very fungible, global fleet. It's not like we're building one data center in one region in the world that's mega scale. We are building it out across the globe for inference, for pre-training, for post-training, for RL, for data synth, what have you. Therefore, the fungibility is super important. The second thing that we're also doing is continually modernizing the fleet.

It's not like we buy one version of, say, NVIDIA and load up for all the gigawatts we have. Each year you buy, you ride the Moore's Law, you continuously modernize and depreciate it. That means you also use software to grow efficiency. I talked about, I think, 30% improvement on both serving up GPT-4.1 and 5.0. That's software. By the way, it's helpful on A100s. It's helpful on GB200s, and it'll be helpful on GB300s. That's the beauty of having the efficiency of the fleet. Keep improving utilization, keep improving the efficiency. That's what you do in the token factory. The other aspect, which Amy spoke to, is we have some of the best agent systems that matter in the high-value domains. It's in information work. That's the Copilot system. Coding.

Microsoft (MSFT) Q1 2026 Earnings Call Transcript

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