The date that matters
Microsoft confirmed on October 7 that it will publish fiscal 2027 first-quarter results after the market close on Wednesday, October 28, 2026. The webcast of the call starts at 2:30 p.m. Pacific.
Traders Union cites consensus of about $90.6 billion in revenue and $4.71 in EPS, against $77.7 billion and $4.13 a year earlier. Those are the outlet's cited consensus numbers, not Microsoft's. Other previews give nearby figures: Visible Alpha forecasts $90.7bn in Q1 revenue, while Zacks projects EPS of $4.67. The estimates cluster, but they differ by data provider.
What Microsoft itself guided in July
The company's own guidance is the benchmark that counts. On its July 29 call, Microsoft said it expected the following for the September quarter:
- Total revenue: $89.85 to $90.95 billion, or 16% to 17% growth.
- Intelligent Cloud revenue: $40.95 to $41.25 billion, up 33% to 34%.
- Azure growth: about 45% in constant currency. Management warned that year-over-year Azure growth can swing from quarter to quarter with capacity timing and contract mix.
- Capital expenditures: over $50 billion, including a lease-reclassification effect.
- Microsoft Cloud gross margin: relatively stable quarter over quarter.
For the full fiscal year, Microsoft said capex would grow year over year. It said operating margin would fall by less than a point, and that it expected to stay free-cash-flow positive.
One wrinkle for the October 28 report is that the segments are being reorganized. A later 8-K, as summarized by StockTitan, now expects Agents and Infra revenue of $75.15–$75.75 billion and Devices and Consumer revenue of $14.7–$15.2 billion. That summary also says Azure constant-currency growth is guided at 44%–45%. Bernstein, as relayed by KuCoin, says GitHub Cloud, Security Copilot, and Healthcare and Life Sciences Cloud move out of Azure. The result is a narrower, more infrastructure-focused Azure. Bernstein says the effect on the growth rate is minimal, and also says the change still leaves comparisons with rival hyperscalers imperfect. Expect some apples-to-oranges moments when you read prior-period comparisons.
The last quarter: strong demand, heavy bills
For the quarter ended June 30, 2026, Microsoft reported:
- Revenue: $90.0 billion, up 18%.
- Operating income: $40.6 billion, up 18%.
- EPS: $4.81 GAAP and $4.74 non-GAAP.
- Intelligent Cloud: $39.3 billion, up 32%.
- Azure and other cloud services: up 43%.
- Microsoft Cloud revenue: $59.3 billion, up 27%.
- Commercial remaining performance obligation (RPO): $678 billion, up 84%.
- Microsoft 365 Copilot: more than 30 million paid seats.
- Azure's annual revenue: passed $100 billion for the first time.
Two details deserve care. First, the $4.74 EPS that Traders Union cites is the non-GAAP number, which excludes the impact of OpenAI investments. Microsoft also said discrete items added $0.27 to EPS against its own guidance. They included a $3.2 billion gain on its Anthropic investment, offset in part by severance and Xbox impairment charges. Second, RPO is contracted revenue not yet recognized, not cash in the bank. Microsoft's CFO said its weighted average duration is 2.3 years, and roughly 30% should be recognized within 12 months. Excluding OpenAI, RPO grew 25%.
The cost side of the ledger
Microsoft reported $41 billion of capex in the quarter, including finance leases. About two-thirds went to short-lived assets, mainly CPUs and GPUs. Finance leases were $5.6 billion, and cash paid for property and equipment was $35.8 billion. Operating cash flow was $55.4 billion and free cash flow was $19.6 billion. Microsoft attributed the free-cash-flow figure partly to the higher capex.
These measures aren't interchangeable. When you see "capex" in a headline, check whether it includes finance leases. Traders Union's roughly $145 billion for the full fiscal year is its own figure. I haven't verified it against Microsoft's filings, so treat it with caution.
Margins show the tension in miniature. Company gross margin was 67%, down year over year on the shift toward Azure and on AI-infrastructure investment. Microsoft Cloud gross margin was 65%, also down. Operating margin was 45%, slightly up. The fair reading is that growth is costly, not that profitability has cracked.
An accounting change that muddies the capex headline
Starting in FY27, Microsoft is extending the estimated useful lives of datacenters and office buildings from 15 to 25 years. The CFO said this has a minimal benefit to FY27 operating income. It also shifts more future datacenter leases from finance leases, which count in capex, to operating leases, which don't. As a result, calendar-2026 capex expectations were restated to about $175 billion, and Microsoft said underlying investment expectations were otherwise unchanged. A lower reported capex number alone would therefore not prove that Microsoft is spending less on infrastructure.
Copilot: seats are not the same as returns
Microsoft said net paid-seat additions more than doubled sequentially, and that paid seats passed 30 million. Paid Microsoft 365 commercial seats grew 6% year over year. Management credited premium offerings, including Copilot, E5 and early E7 traction, for average-revenue-per-user growth. It also noted that Copilot usage weighs on segment gross margin. A seat count shows adoption. It doesn't show customer return on investment or Copilot's profitability, and the October 28 call is the next chance to find out.
For admins, there is also a PC angle. Microsoft told investors it expects Windows OEM and Devices revenue to fall in the high-teens for fiscal 2027. It cited higher component costs pushing up device prices, a prior-year comparison lifted by Windows 10 end of support, and elevated inventory. If you plan hardware refreshes, budget for pricier machines.
What the stock-market commentary adds, and what to discount
Traders Union lists price targets of $625 from TD Cowen, $600 from Mizuho, $675 from UBS, $650 from Jefferies and $636 from Citi. It also says the shares are up about 40% since July. The article gives no report dates or primary documents for those calls, so treat them as the outlet's claims. Its support and resistance levels, its Treasury yields and its Iran scenario are market commentary, not company disclosures. Traders Union's own disclaimer says its content isn't investment advice.
The more useful point is the setup. After a big run, meeting guidance may not be enough. Traders Union argues a cautious capex, margin or data-center payback outlook could trigger profit-taking even if the quarter is strong. Other previewers are more upbeat. Bernstein, per KuCoin, believes Azure and Office can accelerate simultaneously despite the capex worries.
What to watch on October 28
- Azure against the guide: is growth at or above about 45% constant currency, on the new, narrower Azure definition?
- Capex and leases: is the number above $50 billion, and how much of it is lease classification rather than new spending?
- Free cash flow: does Microsoft stay positive while spending climbs?
- Margins: does Microsoft Cloud gross margin hold roughly stable, as guided?
- Copilot: do paid seats and usage-based billing show up as ARPU growth?
- Capacity: Microsoft says demand exceeds supply. Traders Union flags electricity, accelerators and the pace of new capacity as risks.
None of this predicts where the stock goes. It does mark what the numbers need to show for the AI-spending argument to hold up.