Microsoft earnings will look funky - but an elusive number is finally arriving

By Christine Ji

Microsoft is about to pull back the curtain on Azure revenue, giving investors a better understanding of the cloud business

Microsoft forecast Azure revenue to grow between 44% and 45% in constant currency during its fiscal first quarter.

Microsoft's earnings report on Wednesday will finally provide a key metric that Wall Street has sought for more than a decade - but the rest of the release could look a little strange.

Going forward, Microsoft (MSFT) will provide quarterly dollar revenue figures specifically for its cloud-computing platform Azure - something that it has never done before. In a September presentation, the company said that the impact of artificial intelligence on technology and business necessitated this reporting change for increased transparency.

Microsoft forecasts Azure growth of 44% to 45% in constant currency for the September quarter.

The company declined to comment beyond the September presentation.

Microsoft has historically only disclosed year-over-year revenue growth percentages for Azure, lumped together with "other cloud services," although the company did say last quarter that Azure revenue surpassed $100 billion for the first time. For hyperscalers, or the companies spending hundreds of billions of dollars on building AI infrastructure, the growth rate of their cloud businesses has become a key focus for investors looking to gauge the return on AI investments.

The company might "feel more comfortable disclosing more of the granularity now that [Azure is] more of a mature business," Matt Stucky, chief portfolio manager at Northwestern Mutual, told MarketWatch. The cloud platform was launched in 2010, following Amazon (AMZN) Web Services, which launched in 2006, and Google (GOOGL) (GOOG) Cloud Platform, which launched in 2008. Amazon began breaking out its AWS in 2015, and Google followed suit in 2020.

According to Microsoft's restated historical financials, Azure revenue was $72.61 billion in fiscal 2025 and $101.94 billion in fiscal 2026.

The changes are part of a larger shift in how Microsoft reports its financial results. The company is transitioning from its current three reporting segments - Productivity and Business Processes, Intelligent Cloud and More Personal Computing - into two new segments. Agents and Infra will include Azure, Microsoft 365 cloud, productivity and server licensing, and other solutions. Devices and Consumer will include advertising, Xbox and Windows devices.

GitHub cloud and Security Copilot will be stripped out of Azure and grouped with Microsoft 365 cloud instead. "Under this reporting structure, Azure becomes more purely our consumption-based platform and infrastructure business," CEO Satya Nadella wrote in the September presentation.

While the change will give investors a clearer picture for important revenue categories, Guggenheim analyst John DiFucci believes the new reporting structure deserves to be looked at with a "critical eye." Shifting fast-growing AI apps out of Azure stands to bolster growth in the more mature Microsoft 365 business, DiFucci said in an email to MarketWatch. The move is similar to when Microsoft reshuffled its financial reporting practices in 2024 and took Enterprise Mobility and Security out of Azure, DiFucci added.

Additionally, he wrote in a note last week that the change "limits comparable historicals, which may hinder our forecasting ability for a while."

-Christine Ji

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(END) Dow Jones Newswires

10-27-26 1053ET