Microsoft CEO Satya Nadella on Wednesday outlined the tech giant’s accelerating push into artificial intelligence, saying the company’s AI business has crossed a $37 billion annual revenue run rate, marking a 123% increase.
“Just wrapped our quarterly earnings call,” Nadella wrote in a post on X. “We are focused on delivering AI infrastructure and solutions that empower every business to eval-max their outcomes in this agentic computing era.”
The remarks highlight Microsoft’s growing confidence in what Nadella described as a major technological shift. “We are at the beginning of one of the most consequential platform shifts that will change the entire tech stack as we move from end-user driven workloads to workloads driven by end-users and agents,” he said.
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Microsoft reported strong financial results for the third quarter of fiscal year 2026, underscoring rapid growth in cloud computing and artificial intelligence as global demand for AI infrastructure accelerates.
For the quarter ended March 31, the company posted revenue of $82.9 billion, up 18% year over year. Operating income rose 20% to $38.4 billion, while net income climbed 23% to $31.8 billion. Diluted earnings per share increased 23% to $4.27.
Growth was driven largely by Microsoft’s cloud and AI businesses. Microsoft Cloud revenue reached $54.5 billion, up 29%, while Azure and other cloud services surged 40%. Commercial remaining performance obligations rose to $627 billion, reflecting strong long-term demand. The company’s Productivity and Business Processes segment grew 17% to $35 billion, while Intelligent Cloud revenue increased 30% to $34.7 billion. The More Personal Computing segment declined slightly.
According to Nadella, the shift toward “agentic computing” — where AI agents play a central role in executing tasks — is expected to expand the total addressable market and reshape value creation across industries. “This will drive TAM expansion and change the value creation equation across the entire economy,” he added.
To capture that opportunity, Microsoft is focusing on two key priorities, starting with building out AI infrastructure and its agent platform. “We are building the world’s leading AI infrastructure and agent platform as agents proliferate and become the dominant workload,” Nadella said.
The company is rapidly expanding its data center capacity to meet demand. “All up, we added another gigawatt of capacity this quarter, and remain on track to double our overall footprint in just two years,” he noted, adding that Microsoft is “moving aggressively to add capacity aligned to customer demand.”
Microsoft is also seeing increased adoption of its multi-model AI offerings. Nadella said 10,000 customers have used more than one model on Foundry, while 5,000 have used open-source models. Its “IQ layers,” spanning Microsoft 365, Fabric, and Foundry, are helping provide what he described as “an unmatched context engine for thousands of customers using agents or building their own.”
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The second priority centers on deploying “high-value agentic systems” across key domains such as productivity, coding and security.
In workplace productivity, Microsoft 365 Copilot continues to gain traction. “We had our fastest growth since launch and now have over 20 million M365 Copilot seats,” Nadella said. “It’s truly becoming a habit,” he added, noting that weekly engagement is now on par with Outlook.
In software development, adoption of GitHub Copilot is also rising sharply. “Nearly 140,000 orgs now use GitHub Copilot,” Nadella said, adding that usage of GitHub Copilot CLI is “nearly doubling month-over-month.”
Meanwhile, Microsoft’s security offerings are seeing similar momentum. “In security, 2X increase in Security Copilot customers year-over-year,” he said.
Nadella’s comments underscore how central AI has become to Microsoft’s strategy, as the company positions itself at the forefront of a rapidly evolving computing landscape driven by autonomous systems and intelligent agents.
The company continues to invest heavily in infrastructure to support that growth, adding roughly one gigawatt of new capacity during the quarter and aiming to double its global footprint within two years.