Microsoft reported $10 billion in revenue from commercial arrangements with OpenAI, including revenue-sharing payments, in the quarter ending September 30, underscoring the financial scale of the partnership2. The figure represents nearly 11% of Microsoft's $92.28 billion in total fiscal first-quarter revenue, which beat the LSEG consensus estimate of $90.69 billion3.
Revenue grew 19% year over year, and adjusted earnings per share came in at $4.89 versus the $4.73 analysts expected. Shares rose 4% in extended trading on Wednesday. The result extends a streak of record quarterly revenue for Microsoft1.
Azure cloud revenue jumped 48% to $33.2 billion, making it Microsoft's largest single business. Microsoft has been building out data center infrastructure to meet artificial intelligence demand while maintaining positive free cash flow, unlike fellow hyperscalers.
Capital expenditures and finance leases totaled $45.2 billion during the quarter, up roughly 30% year over year but well below the $50.67 billion analysts surveyed by StreetAccount had projected. The company attributed the shortfall to data center delays[2].
Free cash flow declined 27% from a year earlier. Microsoft guided fiscal second-quarter revenue to $96 billion to $97.1 billion, implying roughly 18.8% growth at the midpoint.
ANALYSIS The capex undershoot, driven by data center delays rather than a pullback in AI investment intent, paired with accelerating Azure growth, indicates that Microsoft's constraint is infrastructure supply, not demand. The $10 billion OpenAI revenue line now provides a concrete measure of how much of Microsoft's cloud momentum flows directly from a single AI partnership.