Microsoft
Microsoft Corporation, founded in 1975 by Bill Gates and Paul Allen in Redmond, Washington, is a multinational technology company whose core businesses span cloud computing, enterprise software, consumer electronics, and artificial intelligence.
Profile
Microsoft sells cloud computing services (Azure), productivity software (Microsoft 365), business applications (Dynamics 365), professional networking (LinkedIn), gaming (Xbox), and hardware (Surface devices), with an increasing focus on embedding AI across all products.
Microsoft Corporation, founded in 1975 by Bill Gates and Paul Allen in Redmond, Washington, is a multinational technology company whose core businesses span cloud computing, enterprise software, consumer electronics, and artificial intelligence. As of its fiscal third quarter ending March 31, 2026, Microsoft reported revenue of $82.9 billion, up 18% year-over-year, with operating income of $38.4 billion and net income of $31.8 billion. The company’s cloud business is the primary growth engine: Microsoft Cloud revenue reached $54.5 billion in Q3 FY26, up 29%, and the commercial remaining performance obligation ballooned 99% to $627 billion.
CEO Satya Nadella stated that the AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year. The company is organized into three segments: Productivity and Business Processes (Microsoft 365, LinkedIn, Dynamics 365), Intelligent Cloud (Azure, other cloud services), and More Personal Computing (Windows, Devices, Xbox, Search). In May 2025, Microsoft laid off less than 3% of its workforce (around 6,000 employees) as part of cost controls while continuing heavy investment in AI infrastructure.
In May 2026, its subsidiary LinkedIn announced a separate 5% workforce reduction (approximately 875 employees) as part of a reorganization. Total company headcount declined year-over-year in Q3 FY26. Microsoft returned $10.2 billion to shareholders in Q3 FY26 via dividends and share repurchases. The company faces ongoing regulatory scrutiny in the EU and US regarding its cloud licensing practices and AI partnerships, particularly its deep financial ties to OpenAI.
Products by Microsoft
- A Azure Azure is Microsoft's cloud computing platform, designed for enterprises and developers building AI-driven applications. It offers a unified Be the first to review →
- D Dynamics 365 Microsoft Dynamics 365 is a cloud-based suite of business applications that integrates Customer Relationship Management (CRM) and Enterprise Be the first to review →
- L LinkedIn LinkedIn is a professional networking platform that serves as a hub for B2B marketing, sales prospecting, and career Be the first to review →
- M Microsoft Fabric Microsoft Fabric is a unified SaaS analytics platform launched to general availability in November 2023 that consolidates data Be the first to review →
- M Microsoft Purview Microsoft Purview is a unified data security, governance, and compliance platform from Microsoft, designed for organizations that operate Be the first to review →
- M Microsoft Sentinel Microsoft Sentinel is a cloud-native security information and event management (SIEM) platform running on Azure infrastructure, combining real-time Be the first to review →
Who buys this
- Large enterprises and multinational corporations using Azure, Microsoft 365, and Dynamics 365 for cloud infrastructure, productivity, and CRM/ERP
- Small and medium businesses subscribing to Microsoft 365 Business plans and Azure services
- Government and public sector organizations (federal, state, local) using Azure Government and Microsoft 365 GCC
- Consumers purchasing Microsoft 365 subscriptions, Xbox Game Pass, Surface hardware, and Windows licenses
- Developers and data professionals using Azure AI, Microsoft Fabric, Power BI, and GitHub Copilot
Publicly disclosed clients
- Accenture
- Air India
- Broward County Public Schools
- Cemex
- ContraForce
- First West Credit Union
- KPMG
Strengths and what to watch
Strengths
- Dominant cloud platform: Azure revenue grew 40% year-over-year in Q3 FY26, with Microsoft Cloud revenue reaching $54.5 billion and a $627 billion commercial remaining performance obligation, indicating strong future revenue visibility.
- Massive AI monetization: AI business surpassed $37 billion annual revenue run rate (up 123% YoY), driven by Copilot integrations across Microsoft 365, Azure, and GitHub, and deep partnership with OpenAI.
- Diversified recurring revenue base: Microsoft 365 Commercial cloud revenue grew 19%, Dynamics 365 grew 22%, and LinkedIn revenue grew 12% in Q3 FY26, providing multiple growth levers beyond Azure.
Watch for
- AI infrastructure cost pressure: Gross margin percentage declined in Q3 FY26 due to continued investments in AI infrastructure and growing AI product usage, with Microsoft Cloud gross margin falling to 66%.
- Regulatory and antitrust risk: Microsoft faces ongoing EU and US investigations into its cloud licensing practices and its $13 billion investment in OpenAI, which could force changes to partnership terms or business practices.
- Workforce reduction cycle: After laying off 10,000 in 2023, ~6,000 in May 2025, and LinkedIn cutting ~875 in May 2026, the pattern of periodic restructuring may signal ongoing organizational churn and could impact morale and execution.
Recent moves
Key Information
- Industry
- Cloud Platform
- Founded
- 1975
- Employees
- 241914
- Headquarters
- Redmond, Washington
- Country
- United States
Frequently Asked Questions
What is Microsoft's main business today?
Microsoft sells cloud computing services via Azure, productivity software like Microsoft 365, business applications through Dynamics 365, professional networking on LinkedIn, gaming with Xbox, and hardware like Surface devices. The company is increasingly embedding AI across all its products.
How much revenue did Microsoft report in its latest quarter?
For the fiscal third quarter ending March 31, 2026, Microsoft reported revenue of $82.9 billion, up 18% year-over-year. Operating income was $38.4 billion, and net income reached $31.8 billion, driven largely by strong cloud and AI growth.
How fast is Microsoft's AI business growing?
Microsoft's AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year. This growth is fueled by Copilot integrations across Microsoft 365, Azure, and GitHub, as well as the company's deep partnership with OpenAI.
What is Microsoft's cloud revenue and growth rate?
Microsoft Cloud revenue reached $54.5 billion in Q3 FY26, up 29% year-over-year. Azure revenue alone grew 40%, and the commercial remaining performance obligation ballooned 99% to $627 billion, indicating strong future revenue visibility.
Why did Microsoft lay off employees in 2025 and 2026?
In May 2025, Microsoft laid off less than 3% of its workforce, around 6,000 employees, as part of cost controls while continuing heavy investment in AI infrastructure. In May 2026, subsidiary LinkedIn announced a separate 5% workforce reduction, approximately 875 employees, due to reorganization.
What regulatory risks does Microsoft face?
Microsoft faces ongoing EU and US investigations into its cloud licensing practices and its $13 billion investment in OpenAI. These probes could force changes to partnership terms or business practices, potentially impacting its cloud and AI operations.
Sources
- www.microsoft.com — Q3 FY26 financial results: revenue $82.9B, operating income $38.4B, net income $31.8B, AI run rate $37B, Azure growth 40%, Microsoft Cloud revenue $54.5B, commercial RPO $627B
- www.microsoft.com — Q2 FY26 financial results: revenue $81.3B, operating income $38.3B, net income $38.5B GAAP / $30.9B non-GAAP, Microsoft Cloud revenue $51.5B, commercial RPO $625B
- www.microsoft.com — Q3 FY26 performance details: gross margin percentage decline, Microsoft Cloud gross margin 66%, headcount decline year-over-year, OpenAI investment impact on net income
- www.reuters.com — LinkedIn layoff of ~5% of workforce (approx. 875 employees) in May 2026, reorganization, LinkedIn revenue growth 12% in Q3 FY26
- www.reuters.com — Microsoft layoff of less than 3% of workforce (around 6,000 employees) in May 2025, cost controls while investing in AI