Microsoft has reported a record financial year, driven by strong cloud growth and continued investment in artificial intelligence. The company also revealed plans to launch an AI super-app, marking its next major step in competing with leading AI companies.
CEO Satya Nadella described it as a “record fiscal year for Microsoft”, announcing that the company’s annual revenue exceeded $331 billion, with $214 billion generated by its cloud business. Azure also crossed the $100 billion revenue milestone for the first time.
During the earnings call, Nadella said “This quarter, we are unifying Copilot experiences—including coding—into a single super-app… It’s a major step forward, and I look forward to sharing more details soon.” The upcoming platform is expected to combine AI tools into a single interface, putting Microsoft in closer competition with OpenAI and Anthropic.
According to reports, the AI super-app could integrate the Copilot chatbot, GitHub Copilot, Copilot Cowork, and the Autopilot system. It is expected to offer users a unified AI experience for productivity, coding, and enterprise tasks.
Nadella also said Microsoft is becoming more independent in AI development by building its own AI models and chips. “That is really the enterprise design architecture we are going to promote. We are using it ourselves,” he said.
Microsoft reported growing adoption of M365 Copilot, with paid licenses increasing from 20 million to more than 30 million in the latest quarter.
The company generated $19.6 billion in free cash flow, exceeding analyst expectations of $13.44 billion, although this was 23% lower than the previous year due to continued AI investments.
Microsoft also updated its long-term infrastructure plans by extending data centre lease contracts from 15 years to 25 years, while confirming that its actual investment plans remain unchanged. The company expects reported capital expenditure of $50 billion in the 1st quarter of fiscal year 2027 and $175 billion during CY 2026, both below earlier market expectations.
Additionally, Microsoft’s cloud backlog increased from $627 billion to $678 billion, with the entire $50 billion quarterly increase coming from customers outside the major U.S. AI model developers.
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