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 twenty twenty five Third 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jonathan Nielsen, Vice President of Investor Relations.

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 Alex Jolla, Chief Accounting Officer and Keith Dolliver, Corporate Secretary and Deputy General Counsel. On the Microsoft Investor Relations website, you can find our earnings press release and financial summary slide deck, which is intended to supplement our prepared remarks during today's call and provides the reconciliation of differences between GAAP and non GAAP financial measures. More detailed outlook slides will be available on the Microsoft Investor Relations website when we provide outlook commentary on today's call. 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 third 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 rates only.

We will post our prepared remarks to our website immediately following the call until the complete transcript is available. Today's call is being webcast live and 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 during this conference call and in the Risk Factors section of our Form 10 ks, 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 statement. And with that, I'll turn the call over to Satya.

Thank you, Jonathan. It was a record quarter driven by continued strength of Microsoft Cloud, which surpassed $42,000,000,000 in revenue, up 22% in constant currency. Cloud and AI are the essential inputs for every business to expand output, reduce costs and accelerate growth. Now I'll highlight examples starting with infrastructure. We continue to expand our data center capacity.

This quarter alone, we opened DCs in 10 countries across four continents. Model capabilities are doubling in performance every six months, thanks to multiple compounding scaling laws. We continue to optimize and drive efficiencies across every layer from DC design to hardware and silicon to system software to model optimization all towards lowering costs and increasing performance. You see this in our supply chain where we have reduced dock to lead times for new GPUs by nearly 20% across our blended fleet where we have increased AI performance by nearly 30% ISO power and our cost per token, which is more than halved. When it comes to cloud migrations, we saw accelerating demand with customers in every industry from Abercrombie and French to Coca Cola and ServiceNow, expanding their footprints on Azure.

And we remain the cloud of choice for customers' mission critical VMware, SAP and Oracle workloads with more regional availability than any other hyperscaler. We're also excited about the next frontier in cloud systems with Quantum. In addition to putting our Quantum stack on machines from our partners, we're also making real progress on a path to a utility scale quantum computer with the introduction of Majorana One. When it comes to data and analytics, we have deeply integrated our AI platform with our data stack. PostgreSQL usage accelerated for the third consecutive quarter and it is now used by nearly 60% of the Fortune 500, including companies like BMW and BNY Mellon.

Cosmos DB revenue growth also accelerated again this quarter and remains the go to database for globally distributed NoSQL workloads at any scale. It is used by customers in every industry like CarMax, DocuSign, NTT Data and OpenAI. This quarter, we also saw analytics consumption accelerate. Microsoft Fabric has more than 21,000 paid customers, up 80% year over year. Fabric brings together data workloads like data warehousing, data science, real time intelligence along with Power BI into one end to end solution.

Real time intelligence is now the fastest growing workload in fabric with 40% of customers already using it in just five months since becoming generally available. All up more than 50% of fabric customers like AmorePacific, Louisiana State Government and Petrobras use three or more workloads. And the amount of data in our multi cloud data lake, OneLake has grown more than 6x over the past year. Now on to AI Platform and Tools. Foundry is the agent in AI app factory.

It's now used by developers at over 70,000 enterprises and digital natives from Atomic Work to Epic, Fujitsu and Gainsight to H and R Block and LG Electronics to design, customize and manage their AI apps and agents. We processed over 100,000,000,000,000 tokens this quarter, up 5x year over year, including a record 50,000,000,000,000 tokens last month alone. And four months in, over 10,000 organizations have used our new agent service to build, deploy and scale their agents. This quarter, we also made a new suite of fine tuning tools available to customers with industry leading reliability. And we brought the latest models from OpenAI along with new models from Cohere, DeepSeek, Meta, Mistral, Stability to Foundry.

And we've expanded our PHY family of SLMs with new multimodal and mini models. All up PHY has been downloaded 38,000,000 times. And our research teams are taking it one step further with BitNet B1.58, a billion parameter large language model that can run on just CPUs coming to the foundry. Now on to developer tools. We are evolving GitHub Copilot from pair to peer programmer.

With agent mode in Versus Code, Copilot can now iterate on code, recognize errors and fix them automatically. This adds to other Copilot agents like AutoFix, which helps developers remediate vulnerabilities as

as Code Review Agent, which has already reviewed over 8,000,000 pull requests. And we are previewing a first of its kind SWE Agent capable of synchronously executing developer tasks. All up, we now have over 15,000,000 GitHub Copilot users up over 4x year over year. And both digital natives like Twilio and enterprises like Cisco, HPE, Skyscanner and Target continue to choose GitHub Copilot to equip their developers with AI throughout the entire dev life cycle. With Visual Studio and Versus Code, we have the world's most popular editor with over 50,000,000 monthly active users.

And with Power Platform, we have the leading low code platform for AI makers too. We now have 56,000,000 monthly active Power Platform users, up 27% year over year, who increasingly use our AI features to build apps and automate processes. Now on to future of work. Microsoft three sixty five Copilot is built to facilitate human agent collaboration. Hundreds of thousands of customers across geographies and industries now use Copilot, up 3x year over year.

Our overall deal size continues to grow and this quarter we saw a record number of customers returning to buy more seats. And we are going further. Just last week, we announced a major update bringing together agents, notebooks, search and create into a new scaffolding for work. Our new researcher and analyst deep reasoning agents analyze vast amounts of web and enterprise data to deliver highly skilled expertise on demand directly within Copilot. Beyond horizontal knowledge work, we are introducing agents for every role and business process.

Our sales agent turns contacts into qualified leads and with Sales Chat reps can quickly get up to speed on new accounts and our customer service agent is deflecting customer inquiries and helping service reps resolve issues faster. With Copilot Studio, customers can extend Copilot and build their own agents with no code, low code. More than 230,000 organizations including 90% of the Fortune 500 have already used Copilot Studio. With deep reasoning and agent flows in Copilot Studio, customers can build agents that perform more complex tasks and also handle deterministic scenarios like document processing and financial approvals. And they can now build computer use agents that take action on the UI across desktop and web apps.

And with just a click they can turn any SharePoint site into an agent too. This quarter alone customers created over 1,000,000 custom agents across SharePoint and Copilot Studio, up 130 quarter over quarter. When it comes to business applications, Dynamics three sixty five again took share as companies like Avaya, Brunswick, Softcat switched to Dynamics from legacy providers. Verizon for example chose Dynamics three sixty five sales to improve the efficiency of its sellers. In Healthcare, Dragon Co Pilot is off to a fast start.

Last quarter alone we helped document nearly 9,500,000 physician patient encounters at providers like City of Hope, Ottawa Hospital, Tufts Medicine and Wellstar up over 50% quarter over quarter. In manufacturing, we introduced factory operations and safety agents at Hanover Massay and leading partners like Autodesk, PTC and Siemens have all built their own industrial AI solutions on our stack. And in retail, we have introduced agents to help customers like Bath and Body Works build more personalized shopping experience and improve store operations. When it comes to Windows Copilot plus PCs are faster and have better battery life than any other device in their category. We also continue to win new customers with best in class AI capabilities.

We offer a growing number of AI apps from partners like Adobe, Canva and Zoom. Just last week, we rolled out exclusive AI experiences like Recall, Click to Do and Windows Search to all Copilot plus PCs. And we continue to see increased commercial traction as we approach end of support for Windows 10. Windows 11 commercial deployments increased nearly 75% year over year. Now on to security.

Security is our top priority and we have made significant progress against the engineering objectives we outlined a year and a half ago as part of our Secure Future initiative. We are now applying these learnings to deliver new innovation across our platform. Last month along with our partners, we introduced security copilot agents to help defenders autonomously handle high volume security and IT tasks informed by 84,000,000,000,000 daily threat signals. We also added new capabilities to Defender, Entra and Purview to help organizations secure and govern their AI deployments. All up, we now have 1,400,000 secondurity customers, over 900,000 including Global, ManpowerGroup, TriNet, Regions Bank have four or more workloads, up 21% year over year.

And in Identity, Entra now has more than 900,000,000 monthly active users. Now on to our consumer businesses, starting with LinkedIn. Over 1,000,000,000 professionals use LinkedIn to connect, learn, hire and sell and our membership continues to grow at double digits year over year. Time spent watching videos on the platform was up 36% and comments were up 32% year over year. We're also seeing more members use AI to gain new skills and find jobs.

The number of learners who have used AI powered coaching increased over 2x quarter over quarter. And we remain the market leader in hiring as customers like Equinix and Verizon use LinkedIn hiring assistance to find qualified candidates faster. When it comes to LinkedIn Premium, we saw over 75% quarter over quarter subscriber growth to our Premium Pages offering for SMBs. And LinkedIn marketing solution continues to be the best way to reach B2B decision makers with two consecutive quarters of accelerated revenue growth. More broadly, when it comes to advertising, we are transforming how people search, browse, discover content and use AI as a personal assistant.

With Copilot Search in Bing, we are reimagining search results with overview pages curated by AI and embedded conversational capabilities. With Copilot Vision and Edge, Copilot sees what you see and gives you real time responses while you browse. With Copilot Discover, we are personalizing experience based on user interactions and preferences. And with our updated Copilot app, we are focused on building daily engagement and successful sessions across a range of modalities, whether it is conversing, searching, shopping or travel planning. All up, we again took share across Bing and Edge and our total advertising revenue across our businesses has surpassed $20,000,000,000 over the past twelve months.

Now on to Gaming. We continue to transform the business and focus on margin expansion as we bring our games to over 500,000,000 monthly active users across devices. We ended the quarter as the top publisher by pre orders and pre installs on both Xbox and PlayStation Store. PC Game Pass revenue increased over 45% year over year with Xbox Play Anywhere players now can access more than 1,000 games they can play across console and PC. And just last week, we brought cloud gaming to LG TVs.

Cloud gaming set a new record surpassing 150,000,000 hours played for the first time this quarter. We are also integrating AI across the Xbox. New Copilot for Gaming is a personalized gaming companion that provides in game assistant and expert coaching and our first of its kind Muse model can generate gameplay in real time. Finally, it's fantastic to see the success of the Minecraft movie, which is the top grossing film of the year. In addition to monetizing our IP in new ways, we have seen a 75% plus increase in weekly active users of the game year over year since the release.

In closing, we are rapidly innovating opportunity across both consumer and commercial businesses. In just a few weeks at our BUILD conference, we'll share how we are creating the most powerful AI platform for developers and I encourage you to tune in. With that, let me turn it over to Amy.

Thank you, Satya, and good afternoon, everyone. This quarter revenue was $70,100,000,000 up 1315% in constant currency. Gross margin dollars increased 1113% in constant currency, while operating income increased 1619% in constant currency. And earnings per share was $3.46 an increase of 1819% in constant currency. Results exceeded expectations driven by focused execution from our sales and partner teams.

We continue to see strong demand for our cloud and AI offerings as they help customers drive productivity, increase efficiencies and grow their businesses. And again this quarter revenue from our AI business was above expectations. Commercial bookings increased 1817% in constant currency significantly ahead of expectations again this quarter driven by an Azure commitment from OpenAI. We also saw consistent execution across our core annuity sales motions and continued long term commitments to our platform. Commercial remaining performance obligation increased to $315,000,000,000 up 3433% in constant currency.

Roughly 40% will be recognized in revenue in the next twelve months up 17% year over year. The remaining portion recognized beyond the next twelve months increased 47%. And this quarter our annuity mix was 98%. FX was roughly in line with expectations on total company revenue, segment level revenue and operating expense growth. FX decreased COGS growth by only one point, one point unfavorable to expectations.

Microsoft Cloud revenue was $42,400,000,000 ahead of expectations and grew 2022% in constant currency. Microsoft Cloud gross margin percentage was 69% in line with expectations and decreased three points year over year driven by the impact of scaling our AI infrastructure. Company gross margin percentage was also 69% down one point year over year driven by scaling our AI infrastructure. Operating expenses increased 23% in constant currency lower than expected due to our focus on cost efficiencies as well as investments that shifted to Q4. Operating margins increased one point year over year to 46% better than expected as we continue to focus on building high performing teams and increasing our agility by reducing layers with fewer managers.

At a total company level, headcount at the March was 2% higher than a year ago and was down slightly compared to last quarter. Now to our segment results. Revenue from Productivity and Business Processes was $29,900,000,000 and grew 1013% in constant currency ahead of expectations driven by LinkedIn, Microsoft three sixty five Commercial Products and Microsoft three sixty five Consumer. M365 Commercial Cloud revenue increased 1215% in constant currency in line with expectations. ARPU growth was again driven by E5 and M365 Copilot.

With M365 Copilot, we continue to see growth across customer segments and geos. Paid M365 commercial seats grew 7% year over year to over $430,000,000 While we continue to see installed base expansion across all customer segments growth was primarily driven by our small and medium business and frontline worker offerings. M365 commercial products revenue increased 58% in constant currency ahead of expectations due to higher than expected office transactional purchasing. M365 consumer cloud revenue increased 1012% in constant currency ahead of expectations driven by higher than expected subscription growth following the January price increase. M365 consumer subscriptions grew 9% to $87,700,000 LinkedIn revenue increased seven percent and eight percent in constant currency.

Results were ahead of expectations due to better than expected performance across all businesses. The Talent Solutions business continues to be impacted by weakness in the hiring market. Dynamics three sixty five revenue increased 1618% in constant currency in line with expectations with continued growth across all workloads. Segment gross margin dollars increased 1013% in constant currency and gross margin percentage was relatively unchanged year over year even with the impact of scaling our AI infrastructure. Operating expenses increased 12% in constant currency and operating income increased 1518% in constant currency.

Next, the Intelligent Cloud segment. Revenue was $26,800,000,000 and grew 2122% in constant currency ahead of expectations driven by Azure. In Azure and other cloud services revenue grew 3335% in constant currency including 16 points from AI services. Focused execution drove non AI services results where we saw accelerated growth in our enterprise customer segment as well as some improvement in our scale motions. And in Azure AI services we brought capacity online faster than expected.

In our on premises server business revenue decreased 64% in constant currency slightly below expectations driven by renewals with lower in period revenue recognition from the mix of contracts. The year over year decline is reflective of the continued customer shift to cloud offerings. Enterprise and Partner Services revenue increased 56% in constant currency slightly ahead of expectations due to better than expected performance in Enterprise Support Services. Segment gross margin dollars increased 1314% in constant currency and gross margin percentage decreased four points year over year driven by scaling our AI infrastructure. Operating expenses increased 67% in constant currency and operating income grew 1718% in constant currency.

Now to more personal computing. Revenue was $13,400,000,000 and grew six percent and seven percent in constant currency ahead of expectations due to better than expected results across all businesses. Windows OEM and devices revenue increased 3% year over year ahead of expectations as tariff uncertainty through the quarter resulted in inventory levels that remained elevated. Search and news advertising revenue ex TAC increased 2123% in constant currency. Results were significantly ahead of expectations driven by usage from a third party partnership, better than expected rate expansion and volume growth across Edge and Bing.

And in gaming, revenue increased 56% in constant currency. Xbox content and services revenue increased 89% in constant currency ahead of expectations driven by stronger than expected performance in third party and first party content. Segment gross margin dollars increased 911% in constant currency. Gross margin percentage increased two points year over year driven by strong execution on margin improvement in Search and Gaming. Operating expenses increased 1%.

Operating income increased 2123% in constant currency driven by continued prioritization of higher margin opportunities. Now back to total company results. Capital expenditures including finance leases were $21,400,000,000 slightly lower than expected due to normal variability from the timing of delivery of data center leases. Cash paid for PP and E was $16,700,000,000 roughly half of our cloud and AI related spend was on long lived assets that will support monetization over the next fifteen years and beyond. The remaining cloud and AI spend was primarily for servers both CPUs and GPUs to serve customers based on demand signals including our customer contracted backlog of $315,000,000,000 Cash flow from operations was $37,000,000,000 up 16% driven by strong cloud billings and collections partially offset by higher tax payments.

And this quarter free cash flow was $20,300,000,000 Other income and expense was negative $623,000,000 more favorable than anticipated primarily due to net gains on derivatives and investments. Our losses on investments accounted for under the equity method were slightly higher than expected. Our effective tax rate was approximately 18%. And finally, we returned $9,700,000,000 to shareholders through dividends and share repurchases, an increase of 15% year over year. Now moving to our Q4 outlook, which unless specifically noted otherwise is on a U.

S. Dollar basis. First, through April demand signals across our commercial businesses as well as in LinkedIn, gaming and search have remained consistent. Our outlook assumes those trends continue in Q4. If the environment changes, our results may be impacted.

In our Windows OEM business, our outlook assumes the elevated inventory levels from Q3 will come down in Q4. We have widened our guidance range in our More Personal Computing segment to account for some of this variability. Next, FX. With the weakening of the U. S.

Dollar in April, we now expect FX to increase total revenue growth by one point. Within the segments, we expect FX to increase revenue growth by one point in Productivity and Business Processes and less than one point in Intelligent Cloud and More Personal Computing. We expect FX to increase COGS operating expense growth by less than one point. In Commercial Bookings, we expect solid growth on a significant prior year comparable and a growing ex pre base. Bookings growth will be driven by strong execution across our core annuity sales motions and continued long term commitments to our platform.

As a reminder, larger longer term Azure contracts which are more unpredictable in their timing can drive increased quarterly volatility in our bookings growth rate. Microsoft Cloud gross margin percentage should be roughly 67% down year over year primarily driven by the impact of scaling our AI infrastructure. And now capital expenditures. We expect Q4 capital expenditures to increase on a sequential basis. H2 CapEx in total remains unchanged from our January guidance.

As a reminder, there can be quarterly spend variability from cloud infrastructure build outs and the timing of delivery of finance leases. Next to segment guidance. In Productivity and Business Processes, we expect revenue of US32.05 billion dollars to US32.35 billion dollars or growth of 11% to 12% in constant currency. M365 Commercial Cloud revenue growth should be approximately 14% in constant currency relatively stable compared to the prior quarter. We expect continued ARPU growth through E5 and M365 Copilot and some seat growth moderation given the size of the installed base.

M365 Commercial Products revenue growth should be in the mid single digits. As a reminder, M365 Commercial Products includes both the Windows commercial on premises components of M365 suites and Office transactional purchasing both of which can be variable due to end period revenue recognition dynamics. M365 Consumer Cloud revenue growth should be in the mid teens driven by the January price increase. For LinkedIn, we expect revenue growth in the high single digits. And in Dynamics three sixty five, 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 $28,750,000,000 to $29,050,000,000 or growth of 20 to 22% in constant currency. Revenue will continue to be driven by Azure which as a reminder can have quarterly variability primarily from in period revenue recognition depending on the mix of contracts. In Azure, we expect Q4 revenue growth to be between 3435% in constant currency driven by strong demand for our portfolio of services. In our non AI services, we expect focused execution to continue driving healthy growth. And in our AI services, while we continue to bring data center capacity online as planned, demand is growing a bit faster.

Therefore, we now expect to have some AI capacity constraints beyond June. In our on premises server business, we again expect revenue to decline in the mid single digits with the ongoing customer shift to cloud offerings. And the Enterprise and Partner Services, we expect revenue growth to be in the mid to high single digits driven by Enterprise Support Services. In More Personal Computing, we expect revenue to be $12,350,000,000 to $12,850,000,000 Windows OEM and devices revenue should decline in the mid to high single digits. We expect Windows OEM revenue to decline in the low to mid single digits assuming OEM inventory levels come down through the quarter as noted earlier.

Although the range of potential outcomes is wider than normal. Devices revenue should decline in the high teens. Search and news advertising ex TAC revenue growth should be in the high teens even on a strong prior year comparable. We expect to see continued growth in both volume and revenue per search with share gains across Edge and Bing. Overall search and news advertising revenue growth should be in the mid teens.

And in gaming, we expect revenue growth to be in the mid single digits. We expect Xbox content and services revenue growth to be in the high single digits driven by first party content. Now back to company guidance. We expect COGS of 23,600,000,000.0 to $23,800,000,000 or growth of 19% to 20% in constant currency and operating expense of $18,000,000,000 to $18,100,000,000 or growth of approximately 5% in constant currency. Therefore, even with ongoing AI investments as we scale, we continue to expect full year FY 2025 operating margins expected to be roughly negative $1,200,000,000 primarily driven by investments accounted for under the equity method.

As a reminder, we do not recognize mark to market gains or losses on equity method investments. And lastly, we expect our Q4 effective tax rate to be approximately 19%. Now I'd like to share some closing thoughts as we look to the next fiscal year. We remain committed to investing against the strong demand signals we see for our services. So as a reminder, our earlier comments on FY 2026 capital expenditures remain unchanged.

We expect CapEx to grow. It will grow at a lower rate than FY 2025 and will include a greater mix of short lived assets, which are more directly correlated to revenue than long lived assets. These investments along with focused execution that delivers near term value to our customers will ensure we continue to lead through the cloud and AI opportunity ahead. With that, let's go to Q and A, Jonathan.

Thanks, Amy. We'll now move over to Q and A.

we request that participants please only ask Operator, can you please repeat your instructions?

And 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 a fantastic quarter. In what all of us are looking at as a difficult environment, a lot of uncertainty out there, so really impressive to put up the results that you guys did. One of the things that we heard a lot about this quarter in the media and press reports was changing data center commitments, maybe Microsoft walking away from some of those data center commitments. But it sounds like the AI demand is very strong.

You're talking about not being able to hit all that demand with supply. So could you talk to us about what's going on with your data center strategy? Are there any shifts taking place? And maybe in particular, Satya, you could talk about some of the comments that you had made about the potential risk for oversupply in GPUs out in the future. What exactly was that risk you were talking about?

And are you incorporating that risk into your data center strategy?

Microsoft (MSFT) Q3 2025 Earnings Call Transcript

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