Azure Passed $100 Billion. The Number That Moved the Stock Was a Depreciation Schedule.

Fourth-quarter revenue reached $90.0 billion and Copilot hit 30 million paid seats. Microsoft also extended the useful life of its data centres from 15 years to 25, cutting its calendar-2026 capex headline by about $15 billion without changing what it intends to build.

Jul 30, 2026Source: Microsoft

Microsoft closed fiscal 2026 on 29 July with revenue of $90.0 billion for the quarter, up 18%, and diluted earnings per share of $4.81 against consensus near $4.24. Azure grew 43% year over year, and Microsoft said Azure revenue had surpassed $100 billion for the first time across the full fiscal year. The shares rose about 8%.

Two facts, not one

The $100 billion figure and the 43% figure describe different periods and should not be welded together. The milestone is full-year fiscal 2026 revenue, which grew roughly 41%; the 43% is the fourth quarter alone. Microsoft's own wording is careful about this even where the coverage was not.

Where the rally actually came from

Investors rewarded what looked like capital discipline: calendar-2026 capex guidance came down from roughly $190 billion to about $175 billion. But effective fiscal 2027 Microsoft extends the useful life of data centres and office buildings from 15 years to 25, which shifts many future data centre leases from finance leases — counted in capex — to operating leases, which are not. Microsoft says its underlying investment plans are unchanged. The headline fell; the building did not stop.

What the economics show instead

Quarterly capex including finance leases was $41 billion, up around 70%, with roughly two-thirds going into CPUs and GPUs — short-lived assets whose depreciation no building schedule can stretch. Gross margin fell to 67.2% from 68.6%, and finance chief Amy Hood guided fiscal 2027 operating margins slightly lower.

The number that got least attention

Commercial remaining performance obligations reached $678 billion, up 84% — a contracted backlog roughly twice annual revenue, and the strongest forward-demand signal in the release. Microsoft also brought 88 data centres online during the year and put its AI business at a $37 billion run rate. Copilot's 30 million paid seats, meanwhile, represent about 6.5% of its roughly 464 million Microsoft 365 seats.

Why It Matters

The market read a lease reclassification as restraint. Every hyperscaler now faces the same question Microsoft answered with an accounting policy: how to keep reporting disciplined capital spending while the physical build-out accelerates. Expect the useful-life lever to be pulled elsewhere.