Overview
- Microsoft reported strong Q3 FY26 results that it confirmed on April 29, saying its AI business topped a $37 billion annual run rate while Azure grew about 40% last quarter.
- The company signaled a strategic shift at Build 2026 to build its own models and allocate significant GPU capacity to internal teams to lower reliance on third-party large models.
- Reports say a reworked OpenAI deal locks roughly $250 billion of multi-year Azure commitments and extends certain IP terms through 2032, supporting a large contracted revenue backlog.
- Microsoft’s commercial remaining performance obligations nearly doubled to about $627 billion and Microsoft raised CapEx sharply for data centers and GPUs, which investors worry could pressure near-term margins.
- Product moves include a redesigned 365 Copilot that loads twice as fast, yields roughly 10% faster responses on complex prompts and adds a Work IQ layer, but recent breaches of open-source Azure tools have prompted access restrictions and raised security concerns.