Microsoft Corp Q1 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Keith Weiss - Morgan Stanley - Analyst : Congratulations on another outstanding quarter. And if I'm looking at Microsoft, this is two quarters in a row, we're really seeing results that are well ahead of anybody's expectations when we were thinking about this company a year ago or five years ago, 111% in commercial bookings growth was not on anybody's bingo card, if you will, yet the stock is underperforming in the broader market. And the question I have is kind of getting at the zeitgeist that I think is weighing on the stock. And is something about to change? And I think AGI is kind of a nomenclature or a shorthand for that. And it's something that still included in your guys' OpenAI agreement. So Satya, when we think about AGI or we think about how application and computing architectures are changing, is there anything that you see on the horizon, whether it's AGI or something else, that could potentially change what appears to be a really strong positioning for Microsoft in the marketplace today where that strength will perhaps weaken on a go-forward basis? Is there anything that you're worrying about in that evolution and particularly the evolution of these generative AI models? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2025 / 9:30PM, MSFT.OQ - Q1 2026 Microsoft Corp Earnings Call

Question: Brent Thill - Jefferies LLC - Analyst : Amy, on the bookings blowout. I guess many are somewhat concerned about concentration risk. And I think you noted a number of $100 million contracts, not to go into a lot of detail, but can you just give us a sense of what you're seeing in that 51% RPO and 110%-plus bookings growth that gives you confidence about what you're seeing in terms of the breadth and extent of some of these deals on a global basis. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2025 / 9:30PM, MSFT.OQ - Q1 2026 Microsoft Corp Earnings Call

Question: Mark Moerdler - Sanford C Bernstein & Co LLC - Analyst : Congratulations on the quarter. It's pretty amazing what you guys are doing. Satya and Amy, I'd like to ask you the number one question I receive, whether from investors or at AI conferences I attend, how much confidence do you have that the software, maybe the consumer internet business can monetize all the investments we're seeing globally? Or frankly, are we in a bubble? In fact, Amy, what would be the factors you'd be watching towards -- for to assure that you're not overbuilding to current demand and the demand will sustain.

Question: Mark Murphy - JPMorgan Chase & Co - Analyst : So we seem to be entering into a new era where the contractual commitments from a small number of AI natives are just incredibly large, not only in absolute terms, but sometimes relative to the size of the companies themselves. For instance, contracts worth hundreds of billions of dollars that are 20x their current revenue scale. Philosophically, how do you evaluate the ability of those companies to follow through on these commitments? And how do you think about placing guardrails on customer concentration for any single entity?

Question: Brad Zelnick - Deutsche Bank AG - Analyst : And I'll echo my congrats on an amazing start to the year. Amy, is there any way to quantify or frame the revenue impact of Azure being short on capacity? And while I appreciate the constraints you face are broad across the industry, is there risk of workloads going elsewhere? And how do you mitigate that?

Question: Kash Rangan - Goldman Sachs Group Inc - Analyst : Amy, I just wanted to congratulate you, I think you said before that it is possible to accelerate Azure growth while getting efficient margins and you've done it. Congrats on that. I have one for you, Satya. With respect to the elephant in the room, following just being a little more direct, following up on Keith Weiss' question. There's talk that another hyperscaler came in and took away the business that was rightfully Microsoft's. I'm sure that there is a different point of view here. I'm wondering if you could offer some perspective on your criteria to -- is it about a certain volume of business that you wish to execute on the Microsoft paper? Or is it something broader than that, that I don't think maybe people fully appreciate the terminal value that Microsoft will have on its balance sheet at the end of these contracts, which I think is probably being underestimated as you have a full stack and you've got the multiple vectors to monetize, be it databases, Foundry. And to your point that you are a platform company, not just a hyperscaler. Maybe that's what it is all about, or maybe there's another story about you letting the other hyperscaler company coming from nowhere and claiming a big piece of that four- to five-year puzzle. And congratulations.