Jul 30, 2026 12:41:00

Microsoft's fourth-quarter 2026 forecast shows cloud revenue increasing 27% to approximately 9.7 trillion yen, bringing total revenue to approximately 14.7 trillion yen, although the Xbox division is struggling.

by

Bhautik Joshi

Microsoft announced its Q4 2026 (April-June 2026) earnings, revealing that while overall company revenue rose 18% year-over-year to $90 billion (approximately 14.7 trillion yen) due to growth in its cloud and AI businesses, content and services revenue for Xbox decreased by 10%. Xbox console sales also fell 14% year-over-year, highlighting the struggles of the gaming business amid Microsoft's otherwise strong performance.

FY26 Q4 - Press Releases - Investor Relations - Microsoft
https://www.microsoft.com/en-us/investor/earnings/FY-2026-Q4/press-release-webcast

XBOX revenue drops 10 percent as Microsoft's cloud and AI business surges | The Verge
https://www.theverge.com/tech/972738/xbox-revenue-microsoft-earnings-q4-2026

According to Microsoft's financial results for the fourth quarter of fiscal year 2026, announced on July 29, 2026, total revenue was $90 billion (approximately 14.7 trillion yen) and operating profit was $40.6 billion (approximately 6.64 trillion yen), both representing an 18% increase compared to the same period last year. Net income was $35.8 billion (approximately 5.85 trillion yen), a 31% increase year-on-year, and diluted earnings per share also increased by 32% to $4.81 (approximately 786 yen).

The driving force behind the company's performance was its cloud and AI-related businesses, including Azure. Microsoft Cloud revenue reached $59.3 billion (approximately 9.69 trillion yen), a 27% increase year-on-year, while revenue from Azure and other cloud services increased by 43%. Microsoft CEO Satya Nadella explained that Azure's annual revenue will exceed $100 billion (approximately 16.35 trillion yen) for the first time in fiscal year 2026, and the number of paid seats for Microsoft 365 Copilot has also surpassed 30 million.

by Rainer Stropek

Revenue in the Productivity & Business Processes segment, which includes Microsoft 365 and LinkedIn, also increased 14% year-over-year to $37.8 billion (approximately 6.18 trillion yen). Enterprise cloud revenue for Microsoft 365 increased by 14%, consumer cloud revenue by 24%, and LinkedIn revenue by 12%, indicating that enterprise cloud services continue to support the company's overall growth.

Meanwhile, sales in the More Personal Computing segment, which includes Xbox and Windows, fell 4% year-on-year to $12.9 billion (approximately 2.11 trillion yen). Revenue from Xbox content and services, including Xbox Game Pass, decreased by 10%, and sales of Xbox consoles also fell by 14%. The fact that content and services, including game software and subscriptions, also fell below the previous year's levels indicates that Xbox's slump is not limited to hardware sales.

This decline in revenue comes amidst a business 'reset' in the Xbox division, which includes large-scale layoffs and the sale of game studios. Microsoft also explained in its earnings report that retirement costs and asset impairments related to Xbox had impacted its performance. Furthermore, Xbox plans to raise the price of some game consoles by more than $100 (approximately 16,300 yen) starting August 1, 2026, raising concerns about a further impact on sales volume.

It wasn't just Xbox that was struggling; sales in the Windows OEM and device businesses also fell 7% year-on-year. Microsoft explained that weak demand in the PC market was the reason for the decline in revenue.

For the full fiscal year 2026, Microsoft's revenue is projected to increase by 18% year-on-year to $331.8 billion (approximately 54.23 trillion yen), and net profit is projected to increase by 31% to $133.7 billion (approximately 21.85 trillion yen). While investments in cloud computing and AI are driving overall company growth, Xbox is experiencing a decline not only in hardware sales but also in content and services, which are a continuous source of revenue, making the revitalization of its gaming business a continuing challenge.