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

Impact Segment

Sector

Industry

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Strongest Dimension

Years on list

Previous rank

State

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

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.

Q4 2026

Q3 2026

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

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

legacy

Microsoft

microsoft

Greetings, and welcome to the Microsoft Fiscal Year twenty twenty five Fourth 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 a 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 fourth 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 businesses 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 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 very strong close to what was a record fiscal year for us. All up Microsoft Cloud surpassed $168,000,000,000 in annual revenue, up 23%. The rate of innovation and the speed of diffusion is unlike anything we have seen. To that end, we are building the most comprehensive suite of AI products and tech stack at massive scale.

And to provide more context, I want to walk up the stack starting with Azure. Azure surpassed $75,000,000,000 in annual revenue, up 34% driven by growth across all workloads. We continue to lead the infrastructure wave and took share every quarter this year. We opened new DCs across six continents and now have over 400 data centers across 70 regions more than any other cloud provider. There is a lot of talk in the industry about building the first gigawatt and multi gigawatt data centers.

We stood up more than two gigawatts of new capacity over the past twelve months alone and we continue to scale our capacity faster than any other competitor. Every Azure region is now AI first. All of our regions can now support liquid cooling, increasing the fungibility and the flexibility of our fleet. And we are driving and riding a set of compounding S curves across silicon systems and models to continuously improve efficiency and performance for our customers. Take for example, GBD4O family of models, which have the highest volume of inference tokens.

Through software optimizations alone, we are delivering 90% more tokens for the same GPU compared to a year ago. Beyond the AI fleet, we continue to build our commercial cloud to address customers' unique data residency and sovereignty requirements. This quarter, we introduced the Microsoft Sovereign Cloud, the industry's most comprehensive solution spanning both public and private cloud deployments. All of this innovation is driving our strong results. We saw accelerating growth from migrations again this quarter.

Nestle, for example, migrated more than 200 SAP instances, 10,000 plus servers, 1.2 petabytes of data to Azure with near zero business disruption. That makes it one of the largest and most successful migrations in business history. The next big accelerator in the cloud will be quantum and I'm excited about our progress. In fact, earlier this month, we announced the world's first operational deployment of Level two quantum computer in partnership with Atom Computing. This is how we will continue to think and make investments with decade long arcs while making progress every quarter.

The next layer is data, which is foundational to every AI application. Microsoft Fabric is becoming the complete data and analytics platform for the AI era, spanning everything from SQL to NoSQL to analytics workloads. It continues to gain momentum with revenue up 55% year over year and over 25,000 customers. It's the fastest growing database product in our history. FabricOnely expands all databases and clouds including semantic models from Power BI and therefore it is the best source of knowledge and grounding for AI applications and context engineering.

Azure Databricks and Snowflake on Azure both accelerated as well. Cosmos DB and Azure PostgreSQL are both powering mission critical workloads at scale. OpenAI for example uses Cosmos DB in the hot path of every chat GPT interactions storing chat history, user profiles and conversational state and Azure PostgreSQL stores metadata critical to the operation of ChatGPT as well as OpenAI's developer APIs. This year, we launched Azure AI Foundry to help customers design, customize and manage AI applications and agents at scale. Foundry features best in class tooling, management, observability and built in controls for trustworthy AI.

Customers increasingly want to use multiple AI models to meet their specific performance, cost and use case requirements. And with Foundry, they can provision inferencing throughput ones and apply it across more models than any other hyperscaler, including models from OpenAI, DeepSeek, Meta, xAI's Grok and very soon Black Forest Labs and Mistral AI. We sim shipped 15 models from OpenAI alone on Foundry this year, providing same day access to state of the art models deeply integrated with our infrastructure and tools. And we are seeing accelerated adoption of our new Foundry agent service, which is now being used by 14,000 customers to build agents that automate complex tasks. For example, NASDAQ is using Foundry to build agents that help customers prepare for board meetings, cutting prep time by up to 25%.

All up 80% of Fortune five hundred already use Foundry. And when we look narrowly at just the number of tokens served by Foundry APIs, we processed over 500,000,000,000,000 this year, up over 7x. This is a good indicator of true platform diffusion beyond a few head apps and services. Talking about the app layer, these applications are becoming embedded in our daily work and life. Our family of Copilot apps has surpassed 100,000,000 monthly active users across commercial and consumer.

And when you take a broader look at the engagement of AI features across our products, we have over 800,000,000 monthly active users. Microsoft three sixty five Copilot is becoming the new way to organize work and workflow and work artifacts. We rolled out our biggest update to three sixty five Copilot to date this quarter, bringing together chat, search, create notebooks as well as agents into one intuitive scaffolding. With this innovation and continued product improvements, we are seeing real momentum. Customers continue to adopt Copilot at a faster rate than any other new Microsoft three sixty five suite with strong usage intensity as shown by our week over week retention.

And we saw the largest quarter of seat adds since launch with a record number of customers returning to buy more seats. Barclays, for example, will roll out Microsoft three sixty five Copilot to 100,000 employees globally following a successful initial deployment of 15,000. UBS is expanding its deployment to all of its employees after initially rolling it out to 55,000 of them. And Adobe, KPMG, Pfizer, Wells Fargo, purchased over 25,000 seats this quarter. Tens of thousands of organizations have already used our researcher and analyst deep reasoning agents in the first weeks of availability and we have introduced group level agents in teams like facilitator and interpreter, which generate real time translation and notes in meetings.

Hundreds of partners like Adobe, SAP, ServiceNow and Workday have built their own third party agents that integrate with Copilot and Teams. We are also seeing more customers use Copilot Studio to extend Microsoft three sixty five Copilot and build their own agents. This year customers created 3,000,000 agents using SharePoint and Copilot Studio. And with Copilot tuning, they can easily create agents fine tuned on their company's data, workflow and style that reflect their unique tone, language and expertise. We're also seeing great traction among specific roles and functions starting with developers.

GitHub Copilot continues to have great momentum in IDE with agent mode and new form factors like coding agent, which is capable of asynchronously executing developer tasks. We have 20,000,000 GitHub Copilot users. GitHub Copilot enterprise customers increased 75% quarter over quarter as companies tailor Copilot to their own code basis and 90% of the Fortune 100 now use GitHub Copilot. More broadly, GitHub usage and repos are seeing explosive growth because of AI. AI projects on GitHub more than doubled over the last year.

The surge in wide coding projects and AI coding agents, whether it is Cloud Code, Codex, Cursor or GitHub Copilot are generating more pull requests and more repos on GitHub. And our code review agent is being used heavily across the platform performing millions of code reviews each month. In healthcare, we had a breakout year for Dragon Co Pilot. Customers used our ambient AI solutions to document over 13,000,000 physician patient encounters this quarter, up nearly 7x year over year. For example, at Mercy Health System, more than 1,000 physicians are already using Copilot to reduce administrative burden so that they can focus on providing better care.

They have saved more than one hundred thousand hours to date and plan to expand to all 5,000 providers. As one physician put it, the best thing to happen to my practice in ten years. And in security, we were the first in the industry to introduce agents to help defenders autonomously handle high volume security and IT tasks. More broadly, AI is driving a fundamental change in the BizApps market as customers shift from legacy systems to agentic business applications. Dynamics three sixty five took share this year and we are winning customers in every industry like Verizon with sales, Domino's Pizza Group with ERP, one-eight 100 Flowers with contact center.

When it comes to consumer apps, we are innovating across all surfaces. In fact, on Monday, we introduced Copilot mode in Edge. It's especially exciting to see the innovation coming back to browsers. Copilot mode brings together Copilot Composer, Chat, Discover, Search and Actions to build the next generation of browser for the AI age. Our Copilot consumer app also continued to see strong growth in engagement and successful sessions and we are bringing Copilot to every Windows 11 PC.

With Copilot Vision, you can share your screen with Copilot and get real time insights and assistance on anything. And we are well positioned as we approach Windows 10 end of support in October, thanks to Windows 11 and Copilot plus PCs, which offer customers compelling security as well as AI value. Talking about security, it underlies our cloud and AI infrastructure as well as our Copilots and agents. We have launched over 100 new capabilities over the past year. Just last week, we added a modern data lake to our SIEM, Microsoft Sentinel, bringing together customer data across our first party tools as well as third party ecosystem over three fifty connectors.

We're also extending the systems customers already use for governance, identity, security and management to protect every AI agent. Entra now extends identity permissions policies and access controls to agents. Defender secures nearly 2,000,000 general AI apps. Purview is used by three quarters of the Microsoft three sixty five Copilot customers to protect their data. And all up, we now have nearly 1,500,000 security customers and continue to take share across all major categories we serve.

Before I wrap, I want to talk about two consumer businesses of ours with massive end user reach, LinkedIn and Xbox. LinkedIn is home to 1,200,000,000 members with four consecutive years of double digit member growth. All up comments on LinkedIn rose over 30% and video uploads increased over 20% this year. We continue to bring AI to every part of LinkedIn experience introducing agents across hiring as well as sales. When it comes to gaming, we have 500,000,000 monthly active users across platforms and devices.

We are now the top publisher on both Xbox and PlayStation this quarter with successful launches of Forza Horizon five and Oblivion Remastered. The Call of Duty franchise has never been stronger. 50,000,000 people have played Black Ops six, Total hours surpassed 2,000,000,000. Minecraft saw record monthly active usage and revenue this quarter, thanks in large part to the success of the Minecraft movie. And we have nearly 40 games in development, so much, much more to come.

We surpassed over 500,000,000 of gameplay stream via the cloud this year and Game Pass annual revenue was nearly $5,000,000,000 for the first time. In closing, we are going through a generational tech shift with AI and I have never been more confident in Microsoft's opportunity to drive long term growth and define what the future looks like. With that, let me turn it over to Amy to walk through our financial results as well as the outlook.

Thank you, Satya, and good afternoon, everyone. This year, we delivered over $281,000,000,000 in revenue, up 15% year over year, which reflects the broad strength of our products and services. Operating income was over $128,000,000,000 up 17% year over year as we invested against the expansive opportunity ahead. And in our largest quarter of the year, we significantly exceeded expectations with strong execution by our sales and partner teams. As Satya shared, we're innovating faster than ever to deliver new value to our customers.

This quarter revenue was $76,400,000,000 up 1817% in constant currency. Gross margin dollars increased 1615% in constant currency, while operating income increased 2322% in constant currency. And earnings per share was $3.65 an increase of twenty four percent and twenty two percent in constant currency. For the first time commercial bookings were over $100,000,000,000 increasing 3730% in constant currency on a strong prior year comparable. Strong execution across our core annuity sales motions, including healthy renewals as well as an increase in the number of 10,000,000 and $100,000,000 plus contracts for both Azure and Microsoft three sixty five helped drive these results.

Commercial remaining performance obligation increased to $368,000,000,000 up 3735% in constant currency. Roughly 35% will be recognized in revenue in the next twelve months, up 21% year over year. The remaining portion recognized beyond the next twelve months increased 49%. And this quarter our annuity mix was again 98%. FX was roughly in line with expectations on total company revenue, segment level revenue, COGS and operating expense growth.

Microsoft Cloud revenue was $46,700,000,000 ahead of expectations and grew 2725% in constant currency. Microsoft Cloud gross margin percentage was slightly better than expected at 68% down two points year over year from the impact of scaling our AI infrastructure partially offset by continued efficiency gains in Azure and M365 Commercial Cloud. Company gross margin percentage was 69%, down one point year over year driven by sales mix shift to Azure and the lower Microsoft Cloud gross margin noted earlier. Operating expenses increased 65% in constant currency and operating margins increased two points year over year to 45%. Better than expected revenue growth coupled with a focus on operating efficiently drove the margin expansion.

At a total company level, headcount at the June was relatively unchanged year over year. Now to our segment results. Revenue from Productivity and Business Processes was $33,100,000,000 and grew 1614% in constant currency better than expected driven by M365 Commercial Products and Cloud Services and M365 Consumer Products and Cloud Services. M365 Commercial Cloud revenue was ahead of expectations and increased 1816% in constant currency with two points of benefit from in period revenue recognition. Business trends remained relatively stable to the prior quarter when excluding the in period revenue recognition with ARPU growth again driven by E5 and M365 Co Pilot.

Paid M365 commercial seats grew 6% year over year with installed base expansion across all customer segments though primarily in our small and medium business and frontline worker offerings. M365 Commercial Products revenue increased 97% in constant currency ahead of expectations due to higher than expected Office 2024 transactional purchasing. M365 consumer cloud revenue was better than expected increasing 20% driven by ARPU growth following the January price increase and subscriber growth of 8%. LinkedIn revenue increased nine percent and eight percent in constant currency with growth across all businesses. The Talent Solutions continues to be impacted by weakness in the hiring market.

Dynamics three sixty five revenue increased 2321% in constant currency with strong execution in our core annuity sales motions leading to growth across all workloads. Segment gross margin dollars increased 1615% in constant currency and gross margin percentage increased slightly driven by the efficiency gains noted earlier even as we deliver more AI features across our products and scale our AI infrastructure. Operating expenses increased 76% in constant currency and operating income increased 2119% in constant currency. Next, the Intelligent Cloud segment. Revenue was $29,900,000,000 and grew 2625% in constant currency ahead of expectations driven by Azure and our on premises server business.

In Azure and other cloud services revenue grew 39% significantly ahead of expectations driven by accelerated growth in our core infrastructure business primarily from our largest customers. As a reminder, new cloud and AI workloads are built and scaled using the breadth of our services. Revenue from Azure AI services was generally in line with expectations. And while we brought additional data center capacity online this quarter demand remains higher than supply. In our on premises server business revenue decreased 23% in constant currency ahead of expectations primarily driven by transactional purchasing which also has higher end period revenue recognition.

Enterprise and Partner Services revenue increased 76% in constant currency with growth in Enterprise Support Services partially offset by a decline in Industry Solutions. Segment gross margin dollars increased 1716% in constant currency and gross margin percentage decreased four points year over year driven by scaling our AI infrastructure, partially offset by Azure efficiency gains noted earlier. Operating expenses increased 64% in constant currency and operating income grew 23%. Now to more personal computing. Revenue was $13,500,000,000 and grew 9% exceeding expectations primarily due to Windows OEM as well as Xbox content and services.

Windows OEM and devices revenue increased 3% year over year ahead of expectations as inventory levels remained elevated. Search and news advertising revenue ex TAC increased 2120% in constant currency driven by continued growth in both volume and revenue per search as well as roughly eight points of favorable impact from third party partnerships including the benefit of a low prior year comparable. And in gaming, revenue increased 10%. Xbox content and services revenue increased 1312% in constant currency driven by better than expected performance from first party content and Xbox Game Pass. Segment gross margin dollars increased 15%.

Gross margin percentage increased three points year over year with improvement across all businesses. Operating expenses increased 43% in constant currency. Operating income increased 3433% in constant currency driven by continued prioritization of higher margin opportunities. Now back to total company results. Capital expenditures were $24,200,000,000 including $6,500,000,000 of finance leases, where we recognized the full value at the time of lease commencement.

Cash paid for PP and E was $17,100,000,000 The difference is primarily due to finance leases. More than half our spend was on long lived assets that will support monetization over the next fifteen years and beyond. The remaining spend was primarily for servers both CPUs and GPUs and driven by strong demand signals. Cash flow from operations was $42,600,000,000 up 15% driven by strong cloud billings and collections partially offset by higher supplier payments. And this quarter free cash flow was $25,600,000,000 Other income and expense was negative $1,700,000,000 primarily due to losses on investments accounted for under the equity method.

Our effective tax rate was approximately 17%. And finally, we returned $9,400,000,000 to shareholders through dividends and share repurchases bringing our total cash return to shareholders to over $37,000,000,000 for the full fiscal year. Now moving to our outlook. My commentary for both the full year and next quarter is on a U. S.

Dollar basis unless specifically noted otherwise. Let me start with some full year commentary for FY 2026. First, FX. Assuming current rates remain stable, we expect FX to increase full year revenue growth and COGS growth by approximately two points and to increase operating expense growth by one point. Next, building on the strong momentum we saw this past year, we expect to deliver another year of double digit revenue and operating income growth in FY 2026.

We will continue to invest against the expansive opportunity ahead across both capital expenditures and operating expenses given our leadership position in commercial cloud, strong demand signals for our cloud and AI offerings and significant contracted backlog. Capital expenditure growth as we shared last quarter will moderate compared to FY 2025 with a greater mix of short lived assets. Due to the timing of delivery of additional capacity in H1 including large finance lease sites, we expect growth rates in H1 will be higher than in H2. We remain focused on delivering revenue growth and increasing our operational agility. And as a result, we expect operating margins to be relatively unchanged year over year.

And finally, we expect our FY 2026 effective tax rate to be between 1920%. Now to our outlook for the first quarter. 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 roughly three points in Productivity and Business Processes and roughly one point in Intelligent Cloud and More Personal Computing. We expect FX to increase COGS and operating expense growth by roughly one point.

In commercial bookings, we expect healthy growth on a growing expiry base. Bookings growth will again be driven by strong execution across our core annuity sales motions and long term commitments to our platform. 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 67% down year over year driven by the impact of continuing to scale our AI infrastructure. We expect Q1 capital expenditures to be over $30,000,000,000 driven by the continued strong demand signals we see.

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 32,200,000,000.0 to $32,500,000,000 or growth of 14% to 15% with roughly three points of benefit from FX as noted earlier. In M365 Commercial Cloud, we expect revenue growth to be between 1314% in constant currency with business trends that remain relatively stable compared to the prior quarter. ARPU growth will again be driven by E5 and M365 Copilot.

M365 Commercial Products revenue growth should be in the mid to high 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 low 20s 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 high teens with continued growth across all workloads.

For Intelligent Cloud, we expect revenue of $30,100,000,000 to $30,400,000,000 or growth of 25% to 26% with roughly one point of benefit from FX as noted earlier. Revenue will continue to be driven by Azure, which can have quarterly variability in year on year growth rates depending on the timing of capacity delivery and when it comes online as well as from in period revenue recognition depending on the mix of contracts. In Azure, we expect Q1 revenue growth of approximately 37% in constant currency driven by strong demand for our portfolio of services on a significant base. Even as we continue bringing more data center capacity online, we currently expect to remain capacity constrained through the first half of our fiscal year. In our on premises server business, we expect revenue to decline in the low to mid single digits with the ongoing customer shift to cloud offerings.

In More Personal Computing, we expect revenue to be 12,400,000,000.0 to $12,900,000,000 Windows OEM and devices revenue should decline in the mid to high single digits. We expect the elevated inventory levels at the end of Q4 to come down through the quarter in Windows OEM, although the range of potential outcomes remains wider than normal. Devices revenue should decline. Search and news advertising ex TAC revenue growth should be in the low to mid teens, 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.

Overall Search and News advertising revenue growth should be in the low double digits. And in gaming, we expect revenue to decline in the mid to high single digits against a strong prior year comparable. We expect Xbox content and services revenue to decline in the mid single digits. Now back to company guidance. We expect COGS of 24,300,000,000.0 to $24,500,000,000 or growth of 21% to 22% and operating expense of 15,700,000,000.0 to $15,800,000,000 or growth of 5% to 6%.

Other income and expense is estimated to be negative $1,300,000,000 primarily due to 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 Q1 effective tax rate to be between 1920%. In closing, we finished the year with double digit revenue and operating income growth and exceeded the FY 2025 operating margin commitment we shared a year ago. Our focus remains on investing in security, quality and AI platform and product innovation that delivers value and opportunity to our customers.

We are excited for FY 2026. With that, let's go to Q and A, Jonathan.

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

Thank And our first question comes from the line of Keith Weiss with Morgan Stanley. Please proceed.

Thank you guys for taking the question and congratulations on a fantastic end to FY 2025. I've been covering like this off for a while. I don't think I've ever seen a quarter where like everything came together this well. So congratulations on that.

Thank you for calling InCom Conferencing. The next available operator will be with you momentarily.

So these are workload results that are invaluable for us to learn to build both the products as well as the platform. And then broadly they or rather over time, there will be broad diffusion. In fact, one of the things that Amy and I track is not just the head app usage, but also what's the sort of all the Tier two applications that are being built. So that sort of that speaks a little bit, Keith, to I think your question is as long as we have head apps shaping the platform and then after that we have the broad diffusion happen, which in some sense we're both of those is what we're seeing. So I feel very good about being in standing going forward.

Thanks, Keith. Operator, next question please.

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

Thank you. I'd also give you my congratulations. Amazing. I didn't know how you were going to beat last quarter and you did it. So congratulations.

Microsoft (MSFT) Q4 2025 Earnings Call Transcript

Company Participants