Microsoft Corp. has reported a robust financial performance for its third fiscal quarter, which concluded on March 31, 2026. The technology giant announced a total revenue of $82.9 billion, representing an 18% increase compared to the same period in the previous fiscal year, or a 15% rise when accounting for constant currency fluctuations. This strong top-line growth was mirrored in the company's profitability, with operating income climbing 20% to $38.4 billion (16% in constant currency). Net income also saw a significant surge, reaching $31.8 billion on a GAAP basis, a 23% increase year-over-year. On a non — GAAP basis, which excludes the impact from investments in OpenAI, net income increased by 20%, or 18% in constant currency.
A significant driver of these positive results was the sustained momentum in Microsoft's artificial intelligence initiatives and cloud offerings. The company's AI business alone has surpassed an impressive annual revenue run rate of $37 billion, marking a substantial 123% increase year-over-year. Satya Nadella, chairman and chief executive officer of Microsoft, emphasized the company's strategic direction, stating, "We are focused on delivering cloud and AI infrastructure and solutions that empower every business to eval-max their outcomes in the agentic computing era." This vision underscores Microsoft's commitment to enabling businesses to harness advanced AI capabilities within a robust cloud framework.
The broader Microsoft Cloud segment played a pivotal role, generating $54.5 billion in revenue during the quarter, an increase of 29% (25% in constant currency). This segment also saw its commercial remaining performance obligation (RPO) nearly double, rising 99% to a substantial $627 billion, indicating strong future revenue commitments. Within the Intelligent Cloud sector, Azure and other cloud services stood out with a 40% revenue increase (39% in constant currency), highlighting the continued robust demand for Microsoft's scalable cloud infrastructure.
Further contributing to the company's strong performance was the Productivity and Business Processes segment, which reported revenue of $35.0 billion, an increase of 17% (13% in constant currency). This segment showcased broad growth across its diverse offerings. Microsoft 365 Commercial cloud revenue increased by 19% (15% in constant currency), while Microsoft 365 Consumer cloud revenue experienced an even higher surge of 33% (29% in constant currency). LinkedIn, the professional networking platform, also reported a healthy 12% revenue increase (9% in constant currency), and Dynamics 365, the suite of intelligent business applications, grew by 22% (17% in constant currency).
While most segments experienced significant growth, the More Personal Computing segment recorded $13.2 billion in revenue, a slight decrease of 1% (3% in constant currency). This dip was primarily influenced by a 2% decline in Windows OEM and Devices revenue and a 5% decrease in Xbox content and services revenue. However, not all areas within this segment saw declines, as search advertising revenue, excluding traffic acquisition costs, increased by 12% (9% in constant currency). These varied results across segments highlight Microsoft's broad portfolio and its ability to offset fluctuations in certain areas with robust growth in strategic sectors like cloud and AI, reinforcing its position as a diversified technology leader.
Microsoft continues to drive innovation, delivering hundreds of products, services, and enhancements each quarter. These releases are the culmination of significant research and development investments aimed at empowering customers with greater productivity, enhanced security, and differentiated value across industries. The company's commitment to driving customer success through technology innovation is a recurring theme in its operational strategy. Reflecting its strong financial health and commitment to shareholders, Microsoft returned $10.2 billion to shareholders during the third fiscal quarter of 2026 in the form of dividends and share repurchases.
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