Microsoft’s QQ1 FY2026 results reflect a powerful AI-enabled growth trajectory across its three-reporting segments and its broad software-and-services portfolio. Revenue of $77.7 billion rose 18% year over year (YoY) and 17% in constant currency, driven by the Microsoft Cloud (Azure and related offerings) and higher-margin, high‑value software solutions. Microsoft Cloud revenue reached $49.1 billion, up 26% YoY (25% in constant currency), with Azure growth of 40% YoY (39% CC) and a margin that remained robust at 68% gross, underscoring operating leverage despite AI‑related investments. Net income of $27.7 billion and EPS of $4.13 (GAAP) or $3.72–$3.73 (diluted GAAP/internal metrics) reflected a healthy profitability profile, with operating margins at 49%. Free cash flow climbed 33% to $25.7 billion, supported by strong cash from operations of $45.1 billion and disciplined capital allocation. The quarter featured outsized commercial momentum, including 112% YoY growth in commercial bookings and a remaining performance obligation (RPO) of $392 billion, implying durable revenue visibility even as OpenAI commitments scale. Management emphasized AI platform economics, fungible compute capacity, and the deployment of a “planet-scale token factory” to sustain performance gains. The OpenAI collaboration remains central to growth intent, with the August/September agreement structure providing IP and API rights through 2030–2032, and the company signaling capacity constraints through the fiscal year as demand outstrips supply. Going forward, guidance for Q2 contemplates revenue of $79.5–$80.6 billion with a Microsoft Cloud gross margin around 66%, while reaffirming the long-term thesis of durable revenue growth via AI-enabled products, productivity software, and enterprise solutions. The combination of expansive free cash flow generation, a fortress balance sheet, and a diversified revenue mix positions Microsoft well against peers, though execution remains contingent on capacity expansion, AI workload demand, and OpenAI‑related volatility.