Microsoft Corp. announced changes to its segment reporting structure effective with the fiscal year 2027, aligning internal divisions to better reflect cloud and AI growth. The adjustments consolidate cloud infrastructure and enterprise silicon under a unified Azure & AI Infrastructure category within the Intelligent Cloud segment.
The company reported fiscal 2026 revenue of $331.8 billion, an 18% increase year-over-year, with operating income totaling $155.2 billion and an operating margin of approximately 46.8%. Microsoft Cloud revenue reached an annualized run rate of $59.3 billion in the fourth quarter of fiscal 2026, up 27% year-over-year. The commercial backlog of remaining performance obligations stood at $678 billion at the end of fiscal 2026, an 84% increase from the prior year.
For the first quarter of fiscal 2027, Microsoft projected Intelligent Cloud segment revenue between $40.95 billion and $41.25 billion, with Azure growth expected to accelerate to roughly 45% in constant currency. Capital expenditures for fiscal 2027 are guided at approximately $175 billion, primarily allocated to data centers, network infrastructure, and custom silicon development.
The Intelligent Cloud segment will now consolidate Azure platform computing, Azure AI consumer services, and enterprise silicon infrastructure, including deployments of Azure Maia and Cobalt. Within Productivity and Business Processes, Copilot subscriptions will be integrated into Microsoft 365 Commercial Cloud revenue streams, while Nuance-related vertical AI services will shift to reflect enterprise workflow offerings in Dynamics 365 and Microsoft 365. The Personal Computing segment will refine reporting for Surface hardware, Windows OEM, and Xbox content and services.
