Microsoft guided fiscal second quarter Azure constant currency growth to accelerate to between 49% and 50%, topping the 44.6% consensus estimate as customer demand continues to outstrip available supply, while projecting total quarterly revenue of $96.0B to $97.1B against a $95.62B forecast. The company trimmed its calendar 2026 capital expenditure outlook to about $170B from $175B after third party capacity deliveries and GPU as a service contracts were delayed into the second half of fiscal 2027, sending CoreWeave and other neocloud stocks lower even as Microsoft shares rose 4% to 5% in after hours trading.

First quarter free cash flow reached $18.6B, more than double the $8.54B analyst estimate, after data center spending came in at $45.2B ($39.37B excluding leases), below Microsoft’s own $50B projection due to construction and third party delivery delays. CFO Amy Hood said capex will exceed $50B in the second quarter and accelerate in the second half of the fiscal year as the postponed capacity comes online, while projecting Microsoft will remain free cash flow positive in fiscal 2027. To curb costs alongside rising AI infrastructure spend, Microsoft is offering voluntary buyouts to up to 60,000 employees across the US, Canada, the UK and India.

The guidance followed a first quarter in which total revenue rose 19% year over year to $92.28B and adjusted EPS climbed 18% to $4.89, beating estimates of $90.63B and $4.73. Azure revenue grew 48% to $33.17B, lifted by higher than expected AI token pricing, while OpenAI generated $10B, or nearly 11%, of Microsoft’s quarterly revenue alongside $7.2B in outstanding receivables. Commercial remaining performance obligations stood at $677B, up 73% from a year earlier but down from $678B in the prior quarter and below the $705.6B estimate.