Microsoft delivered another solid quarter, with double-digit gains across both top and bottom lines. Most notably, the company is evolving its business model from a traditional seat-based licensing structure to a license-plus-consumption framework to better monetise the rise of agentic AI.

Financial indicator	Q3 2025 (US$ million)	Q3 2026 (US$ million)	Percentage change
Revenue	70,066	82,886	+18.3%
Productivity and Business Processes	29,944	35,013	+16.9%
Intelligent Cloud	26,751	34,681	+29.6%
More Personal Computing	13,371	13,192	-1.3%
Operating income	32,000	38,398	+20.0%
Net income	25,824	31,778	+23.1%

Revenue from AI business surged 123% year-on-year, with an annual run rate of US$37 billion. Overall operating margin improved from 45.7% in Q3 2025 to 46.3% in Q3 2026, driven by ongoing operational improvements across Azure and M365 Commercial cloud and a favourable shift toward higher-margin businesses. These gains were partially offset by continued investments in AI and talent as well as increased Copilot usage, alongside an impairment charge in the gaming segment and a low prior-year expense comparable. Capital expenditures (CapEx) declined from US$37.5 billion to US$31.9 billion quarter-on-quarter. This decline is...