Microsoft says its AI business tops $37 billion annual run rate

In short: Microsoft says the part of its business tied to AI is now running at more than $37 billion a year in revenue, more than double last year.

What's going on

Microsoft reported results for its fiscal Q3 2026 quarter, which ended March 31, 2026. In that update, the company said its “AI business” has passed a $37 billion annual revenue run rate, up 123% from a year earlier.

A “run rate” is a simple estimate, like taking one quarter’s pace and projecting it across a full year (similar to multiplying a monthly paycheck to guess a yearly salary). Microsoft’s last widely cited AI run rate was $13 billion for the December 2024 quarter, which suggests the AI number has nearly tripled in about five quarters.

Microsoft said this AI revenue includes money from customers building AI tools on Azure, which is Microsoft’s cloud computing service (renting computing power over the internet). It also includes companies developing top tier AI models on Microsoft’s infrastructure, plus Microsoft’s own AI products such as Copilot.

The broader business also grew. Total revenue was $82.9 billion, up 18% year over year. Microsoft Cloud revenue was $54.5 billion, up 29%, and Azure and other cloud services revenue rose 40%, with Microsoft linking that growth to demand for AI work.

What to watch

Microsoft has been spending heavily to build data centers and buy specialized chips to run AI, and it expects that spending to continue. The key question is whether AI demand stays strong enough to keep Azure growth near current levels in the next quarter and beyond.

Source: NYTimes