Technology giant Microsoft (NASDAQ: MSFT) reported Q1 CY2026 results beating Wall Street’s revenue expectations, with sales up 18.3% year on year to $82.89 billion. Its GAAP profit of $4.27 per share was 5.5% above analysts’ consensus estimates.

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Revenue Growth

Microsoft proves that huge, scaled companies can still grow quickly. The company’s revenue base of $160 billion five years ago has nearly doubled to $318.3 billion in the last year, translating into an exceptional 14.8% annualized growth rate.

Over the same period, Microsoft’s big tech peers Amazon, Alphabet, and Apple put up annualized growth rates of 12.6%, 16.5%, and 7.6%, respectively. Comparing the four is relevant because investors often pit them against each other to derive their valuations. With these benchmarks in mind, we think Microsoft’s price is attractive.

We at StockStory emphasize long-term growth, but for big tech companies, a half-decade historical view may miss emerging trends in AI. Microsoft’s annualized revenue growth of 16% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, Microsoft reported year-on-year revenue growth of 18.3%, and its $82.89 billion of revenue exceeded Wall Street’s estimates by 1.7%. Looking ahead, sell-side This projection is admirable for a company of its scale and illustrates the market sees some success for its newer AI-enabling products.

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Intelligent Cloud: Azure & Cloud Computing

The most pressing question about Microsoft’s business is how much AI can boost its revenues. The company's cloud computing division, Intelligent Cloud, is one we watch carefully because its Azure platform and server/database offerings could be the biggest beneficiaries of the AI megatrend.

Intelligent Cloud is 40.3% of Microsoft’s total sales and grew at a 15.7% annualized rate over the last four years, in line with its consolidated revenues. The previous two years saw some deceleration as it grew by 12.8% annually.

Intelligent Cloud put up 29.6% year-on-year revenue growth in Q1. Microsoft Azure, a business line the market watches with bated breath due to its AI exposure, sits within the Intelligent Cloud segment, but the company does not break out Azure revenue specifically.This was faster than AWS’s 23.6% increase but slower than Google Cloud’s 63.4%.

In terms of market share, Azure is a close second to AWS and ahead of Google Cloud in this public cloud provider market.If Azure can continue outgrowing AWS in the coming years, it certainly has a chance to overtake it as the top cloud provider.

Comparisons and peers aside, Azure’s 25%+ growth this quarter is strong evidence that the AI impact is indeed moving the needle.

Key Takeaways from Microsoft’s Q1 Results

It was encouraging to see Microsoft beat analysts’ revenue and EPS expectations this quarter. We were also happy its Azure growth of 40% (39% constant FX) accelerated sequentially compared to last quarter. Overall, we think this was a solid quarter with some key areas of upside. The market seemed to be hoping for more, and the stock traded down 3.3% to $411.38 immediately after reporting.

Is Microsoft an attractive investment opportunity at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).