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Microsoft Reports Strong Financial Growth Fueled by AI Demand
Microsoft (NASDAQ: MSFT) reported fiscal Q1 2026 revenue of $77.7 billion, an 18% year-over-year increase, with earnings per share rising 23% to $4.13. The cloud segment alone generated $49.1 billion, up 26% year-over-year, while Azure revenue surged 40% as companies shifted AI workloads to the platform.
In addition, Microsoft announced a substantial jump in commercial bookings, which increased 112% year-over-year, while remaining performance obligations rose 51% to $392 billion, driven by demand for AI computing power. The company invested $34.9 billion in capital expenditures this quarter, primarily for AI infrastructure, and returned $10.7 billion to shareholders through dividends and buybacks.
Despite these robust growth metrics, Microsoft shares are currently trading at a price-to-earnings ratio of approximately 35, which may limit future returns if AI-related growth does not meet expectations.
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