Microsoft reported a sharp increase in quarterly profit, earning more than $36.6 billion in the three months ended Sept. 30, even as the tech giant prepares to offer voluntary buyouts to thousands of employees.
The company announced its latest financial results Wednesday, reporting revenue of $92.3 billion, up 19% from the same period a year earlier. Strong growth in its cloud computing business helped drive the results, underscoring continued demand for Microsoft’s technology services.
The earnings report came days after Microsoft said it would offer voluntary separation packages to eligible employees in Canada, India, the United Kingdom and the United States. The program could cover approximately 60,000 workers, representing more than a quarter of the company’s roughly 223,000 employees. The offer comes as Microsoft continues to invest heavily in AI infrastructure, including data centers, specialized chips and cloud computing facilities.
READ: Microsoft employee with ‘200/200’ rating weighs exit package amid layoff fears (October 28, 2026)
Investors are closely monitoring whether the technology industry’s growing AI spending will generate sufficient returns. Tech giants including Meta, Alphabet and Amazon are reportedly on track to spend more than $700 billion collectively this year on AI chips and infrastructure.
Microsoft’s cloud business remained a major contributor to its growth, with Microsoft Cloud revenue increasing 30%. The business encompasses a range of enterprise technology and cloud services. At the start of its new fiscal year, Microsoft also changed how it reports its financial results, reorganizing its businesses into two segments.
The Agents and Infrastructure segment includes AI-focused operations and Azure, while the Devices and Consumer segment includes products and services such as Xbox. Agents and Infrastructure generated $76.8 billion in revenue.
Microsoft’s capital expenditures have continued to rise, with the company reporting $37.8 billion in spending earlier this year, most of it directed toward AI. The growing investment has also put pressure on free cash flow, which fell to $18.6 billion, down from $25.7 billion in the same quarter last year and $19.6 billion in the previous quarter. Despite the decline, the company continued to generate positive free cash flow.
READ: Microsoft offers buyouts to 60,000 workers as it shifts spending toward AI (October 26, 2026)
Microsoft co-founder Bill Gates has also raised concerns about AI misuse and the need for stronger government oversight. In a recent episode of The Verge’s “Decoder” podcast, Gates said the transition to an AI-driven economy would create winners and losers, with significant changes expected across industries. He warned that artificial intelligence could trigger two decades of major economic and social disruption. As technology advances, some people may eventually choose to live “like the Amish” to preserve human relationships and traditional activities.
Microsoft shares rose nearly 2.9% in after-hours trading in New York on Wednesday.
Meanwhile, Alphabet reported weaker quarterly earnings Wednesday, with net profit falling 25% from a year earlier. Its shares dropped 9.75% following the announcement.