Microsoft reported an 18% year-over-year increase in its first-quarter fiscal 2026 revenue, largely propelled by its burgeoning cloud computing business, which overshadowed a significant decline in its Xbox gaming division.
The tech giant posted total revenue of $77.7 billion for the quarter. Net income grew by 12% compared to the previous year, reaching $27.7 billion.
Microsoft Cloud emerged as the primary growth engine, with its revenue surging 28% year-over-year to $49.1 billion. A substantial portion of this growth was attributed to Azure, Microsoft’s cloud computing platform, which expanded by 40%.
While cloud services demonstrated robust performance, other segments presented a mixed picture. Revenue from hardware, including Windows Operating System Environment (OCE) and other devices, climbed 6%.
However, the Surface line of products continued its multi-year trend of declining revenue.
The company’s Xbox gaming division experienced a 29% reduction in revenue. Despite this decrease, Microsoft noted that its “Xbox everywhere” strategy, which expands game availability to other consoles, contributed a modest 1% to growth.