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Microsoft Q1 Results: Cloud business leads earnings beat even as free cash flow falls; Stock rises - Published OnOct 29, 2026 | 05:17 IST - Last Updated OnOct 29, 2026 | 05:17 IST Microsoft's Free cash flow for the quarter fell 27% from last year to $18.63 billion. The only difference being, unlike its peers Alphabet and Meta, Microsoft remained free cash flow positive at the end of the quarter. Shares of Microsoft Corp. rose in extended trading on Wednesday, October 28, after its results for the first quarter of fiscal 2027 turned out to be better than what analysts had anticipated led by its cloud business. Microsoft reported revenue of $92.28 billion during the quarter, higher than the $90.69 billion that analysts were working with. Its Earnings Per Share (EPS) of 4.89 on an adjusted basis was also higher than the $4.73 estimate. On a year-on-year basis, Microsoft's revenue grew by 19%. For the ongoing second quarter, Microsoft expects revenue to be between $96 billion and $97.1 billion, which implies a growth of 18.8% compared to last year. Analysts had projected the figure to be $95.6 billion. Free cash flow for the quarter fell 27% from last year to $18.63 billion. The only difference being, unlike its peers Alphabet and Meta, Microsoft remained free cash flow positive at the end of the quarter. Alphabet's free cash flow was a negative $9 billion, while Meta also reported negative free cash flow at the end of the quarter. The company also maintained that it will continue to generate free cash flow through fiscal 2027 but will access additional sources of funding "when it is attractive to do so." Microsoft spent $45.2 billion in capex and finance leases during the quarter, 30% higher than last year, but lower than estimates of $50.67 billion. Capex for the second quarter is seen at $50 billion, also lower than estimates of $53.1 billion, while the full fiscal 2027 figure is seen at $170 billion. The management said that they still continue to see demand for their services that outpaces supply. 75% of Microsoft's capex is now tied to short-lived assets such as Intel chips and Nvidia GPUs, higher than the 66% reported in the past three quarters and 50% in the same quarter last year. Growth during the quarter was led by the Azure cloud infrastructure business, which grew by 48% from last year. The management expects growth to be between 49% to 50% for this business in the ongoing quarter. Azure has now become Microsoft's biggest single business. It also disclosed revenue for the Azure business for the first time. That figure stood at $33.17 billion, despite delays from third-party providers. The figure was higher than the $32.32 billion estimate. During the June quarter, the growth rate stood at 42%. Microsoft shares 2.5% higher afterhours at $544.3. The stock had ended little changed in extended trading.
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