Feng Huang Wang·2025-10-29 23:48Core Viewpoint - Microsoft reported strong financial results for Q1 of FY2026, with significant revenue and profit growth, but the stock price declined in after-hours trading despite exceeding analyst expectations [1][2]. Financial Performance - Total revenue for Q1 was $77.673 billion, an 18% increase from $65.585 billion year-over-year, with a 17% increase when adjusted for constant currency [4]. - Net profit reached $27.747 billion, up 12% from $24.667 billion year-over-year, with an 11% increase on a constant currency basis [4]. - Operating income was $37.961 billion, a 24% increase from $30.552 billion year-over-year, with a 22% increase when adjusted for constant currency [4]. - Diluted earnings per share were $3.72, a 13% increase from $3.30 year-over-year, with an 11% increase on a constant currency basis [4]. - Microsoft returned $10.7 billion to shareholders through dividends and stock buybacks during the quarter [4]. Segment Performance - Cloud revenue was $49.1 billion, a 26% increase year-over-year, with a 25% increase on a constant currency basis [4]. - Productivity and Business Processes revenue was $33 billion, a 17% increase year-over-year, with a 14% increase on a constant currency basis; LinkedIn revenue grew by 10% [4]. - Intelligent Cloud revenue was $30.9 billion, a 28% increase year-over-year, with a 27% increase on a constant currency basis; Azure and other cloud services revenue grew by 40% [4]. - More Personal Computing revenue was $13.8 billion, a 4% increase year-over-year, with Windows OEM and devices revenue increasing by 6% [4]. Investment in AI - Microsoft has committed a total investment of $13 billion in OpenAI, with $11.6 billion already funded as of September 30; this investment contributed $3.086 billion to Q1 profits [1][4]. - CEO Satya Nadella emphasized the importance of AI and cloud technology in driving growth and the company's commitment to increasing investments in these areas [5].