Microsoft Beats Q1 Forecasts as Xbox and Windows Revenue Fall, AI Grows

WHO:

Kotaku - Xbox head Asha Sharma announced “the most significant restructure in Xbox history.”

The Verge - Microsoft reported its first-quarter 2027 fiscal results; the article was written by Tom Warren.

Yahoo Finance - Microsoft (MSFT), CEO Satya Nadella, and CFO Amy Hood were involved in the earnings report and call.

Yahoo Finance - Analysts’ expectations are cited as Bloomberg consensus estimates.

Yahoo Finance - Microsoft’s new reporting segments are Agents and Infra, and Devices and Consumer.

WHAT:

Kotaku - Microsoft said Xbox hardware revenue had fallen 13% year over year in the prior quarter and 33% in the quarter before that.

Kotaku - Xbox’s first-quarter results followed a restructure that eliminated more than 1,600 jobs, with cuts totaling 3,200 planned by July of next year.

Bloomberg - Microsoft is seeking to raise at least $25 billion through a U.S. investment-grade bond sale to fund AI-related capital expenditures.

Kotaku - Microsoft said Devices and Consumer cost of revenue fell 8%, driven by lower amortization of intangible assets from its Activision acquisition.

Kotaku - Xbox had one remake, Halo, during the quarter; PlayStation 5 ports of Black Ops 1 and 2 sold 11 million copies on PlayStation.

Kotaku - Microsoft said Devices and Consumer operating expenses fell 3%, driven by Xbox, while continued investment in R&D compute capacity and talent offset some of the reduction.

Kotaku - Devices and Consumer cost of revenue declined 8%, which Microsoft attributed to lower amortization of intangible assets from the Activision acquisition.

Kotaku - Microsoft said Xbox content and services revenue declined because of lower third-party content revenue and Xbox Game Pass revenue.

BBC - Microsoft’s profits for the three months to the end of September exceeded $36.6 billion (£27.5 billion).

BBC - Microsoft announced plans to cut its workforce by more than a quarter days before reporting its profits.

Yahoo Finance - Microsoft reported earnings per share of $4.89 and revenue of $92.28 billion, exceeding analyst expectations of $4.73 per share and $90.63 billion in revenue.

Yahoo Finance - In the comparable period a year earlier, Microsoft reported EPS of $4.13 and revenue of $77.6 billion.

Yahoo Finance - Microsoft stock rose more than 4% after the earnings news.

Yahoo Finance - Agents and Infra revenue was $76.8 billion, above the $75.6 billion expected. Azure revenue rose 48% to $33.17 billion from $22.38 billion.

Yahoo Finance - Devices and Consumer revenue totaled $15.5 billion, above the $15 billion expected.

The Verge - Xbox hardware revenue fell 14% year over year; Xbox content and services revenue fell 2%; Windows OEM and Devices revenue fell 22%.

Yahoo Finance - Microsoft 365 commercial cloud and consumer cloud revenue each rose 17%, attributed to increased revenue per user and more users.

Yahoo Finance - Capital expenditures, including leases, were $39.37 billion, below the $45.93 billion analysts expected. Microsoft said roughly three-quarters of $45.2 billion in capital expenditures went to “short-lived assets,” including CPU and GPU chips and data-center networking equipment.

Yahoo Finance - Microsoft said it would spend more than $50 billion on capital expenditures in Q2 and $170 billion in fiscal 2027, driven by CPUs, GPUs, and third-party capacity deliveries in the second half; it said it would remain cash-flow positive in 2027.

Yahoo Finance - Microsoft brought 24 data centers online across five continents during the quarter.

Yahoo Finance - More than 10 million LinkedIn members use AI-powered job search daily, and 25,000 customers use agentic hiring solutions. Nadella said hiring-assistant users find interview-quality applicants 33% faster while reviewing 83% fewer profiles.

Yahoo Finance - Customers with 50,000 Copilot seats increased eightfold year over year. Copilot daily users rose nearly 50% quarter over quarter and fivefold year over year.

Yahoo Finance - OpenAI paid Microsoft $10 billion during the quarter ended in September, including revenue-sharing payments—about 11% of Microsoft’s $92 billion in revenue and more than Xbox and Windows combined. Microsoft owned about 24% of OpenAI; OpenAI owed Microsoft about $7 billion, up from $6 billion three months earlier.

Yahoo Finance - Microsoft’s backlog of signed contracts was about $677 billion; new bookings fell 12% year over year. Remaining commercial performance obligations rose 73% year over year to $677 billion.

Yahoo Finance - Nadella said Microsoft was delivering “greater capability, choice, control, and cost efficiency” and translating innovation into “growing adoption and real-world impact across every industry.”

Yahoo Finance - Hood said improved engineering efficiencies helped Azure meet additional capacity needs; she projected Azure revenue growth of 49% to 50% year over year in Q2.

Yahoo Finance - Hood said Microsoft would consider raising capital if attractive and appropriate, but had not needed to; she said the company was cash-flow positive. She described efficiency as “stability,” “security,” “reliability,” and “operational excellence.”

WHERE:

Yahoo Finance - Microsoft’s 24 new data centers were brought online across five continents.

WHEN:

Bloomberg - The planned bond sale would be Microsoft’s first U.S. investment-grade bond sale since 2017, when the company raised $17 billion.

WHY:

Yahoo Finance - Stifel analyst Brad Reback said the results increased confidence in Microsoft sustaining mid- to upper-teens revenue growth, with cost-of-goods-sold and operating-expense efficiencies supporting expanding operating margins.

Yahoo Finance - Yahoo Finance reported that Alphabet’s shares fell 11% after its earnings report, citing Google search sales of $63.4 billion versus $64.9 billion expected and negative free cash flow of $9.1 billion versus an estimated $3.5 billion negative.

Kotaku - Microsoft said Devices and Consumer operating expenses fell 3%, driven by Xbox; it said continued investment in R&D compute capacity and talent offset some of the reduction.

Kotaku - Kotaku reported that a Game Pass price cut took effect in April and said console price increases were occurring amid a memory and storage shortage.

Yahoo Finance - Microsoft attributed PC revenue declines partly to difficult comparisons with the previous year, when it was ending Windows 10 support and enterprise customers were buying new PCs. The article also cited slowing PC and Xbox console demand.

Yahoo Finance - Microsoft said Azure’s projected growth would be supported by improved engineering efficiency and other factors.

HOW:

Yahoo Finance - Azure sales growth exceeded analyst estimates by about 300 basis points; Microsoft’s Azure growth guidance for the current quarter was four percentage points above consensus.

Kotaku - Kotaku reported that Xbox’s quarter included a Halo remake and PlayStation 5 ports of Black Ops 1 and 2; those ports sold 11 million copies on PlayStation.

Yahoo Finance - The Agents and Infra segment includes Azure, Microsoft 365 cloud services, productivity and server licensing, industry solutions, and frontier and support services. Devices and Consumer includes search and advertising, Xbox, and Windows OEM and devices.

(UPDATED October 29, 2026 16:03 UTC)

Microsoft reported first-quarter fiscal 2027 revenue of $92.28 billion and earnings of $4.89 per share, both above expectations, with profit topping $36.6 billion and Azure revenue rising 48% to $33.17 billion. The company plans to spend $170 billion on capital expenditures in fiscal 2027, including more than $50 billion in the second quarter, and is seeking to raise at least $25 billion through a U.S. bond sale to support AI investment; it also brought 24 data centers online across five continents. Xbox hardware revenue fell 14% year over year, while content and services revenue declined 2%, as Xbox head Asha Sharma announced what she called the most significant restructure in the division’s history, with more than 1,600 jobs eliminated and further cuts planned.

(UPDATED October 29, 2026 15:00 UTC)

Microsoft reported first-quarter fiscal 2027 revenue of $92.28 billion and earnings of $4.89 per share, beating analyst expectations, while profit topped $36.6 billion and shares rose more than 4%. Azure revenue climbed 48% to $33.17 billion, but Xbox hardware revenue fell 14% and content and services revenue slipped 2%; Microsoft also said it plans to spend $170 billion on capital expenditures in fiscal 2027 and is seeking to raise at least $25 billion through a bond sale to support AI investment. The company brought 24 data centers online across five continents, reported $677 billion in signed contract obligations, and said it expects Azure growth of 49% to 50% in the second quarter.

(UPDATED October 29, 2026 13:04 UTC)

Microsoft reported first-quarter fiscal 2027 revenue of $92.28 billion and earnings of $4.89 per share, both above analyst expectations, while profit exceeded $36.6 billion and its stock rose more than 4%. Azure revenue climbed 48% to $33.17 billion, and Microsoft brought 24 data centers online across five continents, but Xbox hardware revenue fell 14% and Xbox content and services revenue declined 2%. Microsoft said it plans to spend $170 billion on capital expenditures in fiscal 2027, while CEO Satya Nadella highlighted rising Copilot use and the company’s backlog of signed contracts, which reached about $677 billion.

(UPDATED October 29, 2026 07:03 UTC)

Microsoft reported fiscal first-quarter revenue of $92.28 billion and earnings of $4.89 per share, both above analyst expectations, while profit topped $36.6 billion and its stock rose more than 4%. Azure revenue jumped 48% to $33.17 billion, helping drive $76.8 billion in Agents and Infra revenue, while Devices and Consumer revenue reached $15.5 billion; Xbox hardware, Xbox services, and Windows device revenue all declined. Microsoft plans to spend more than $50 billion on capital expenditures in the second quarter and $170 billion in fiscal 2027, as it expands data-center capacity and reported strong growth in Copilot use.

(UPDATED October 29, 2026 02:04 UTC)

Microsoft reported first-quarter fiscal 2027 earnings of $4.89 per share on $92.28 billion in revenue, beating analyst expectations, and its stock rose more than 4%. Azure revenue jumped 48% to $33.17 billion, while Microsoft said Copilot use was surging and it had brought 24 data centers online across five continents; declines in Xbox and Windows hardware offset some growth. The company plans to spend more than $50 billion on capital expenditures in the second quarter and $170 billion in fiscal 2027, while CFO Amy Hood projected Azure growth of 49% to 50% in the second quarter.