Microsoft Cloud Earnings Soar as Windows and Xbox Boost Growth

Microsoft has posted another strong quarter, driven by surging cloud revenue and steady gains in Windows and Xbox. The company reported $76.4 billion in revenue and $27.2 billion in net income for the fourth quarter of its 2025 fiscal year, marking an 18% revenue increase and a 24% jump in profit. Microsoft’s cloud earnings, led by Azure, continue to fuel its overall growth despite recent layoffs and a challenging PC market.

Microsoft Cloud Earnings Lead the Way

Cloud services remain Microsoft’s primary growth engine. Azure revenue surged 39% year-over-year in Q4, with CEO Satya Nadella confirming that the platform generated over $75 billion in revenue for the entire fiscal year—a 34% annual increase. These results highlight Microsoft’s dominance in the cloud market, where demand for enterprise AI services and scalable infrastructure continues to rise.

Windows and Device Revenue Show Modest Recovery

Despite a sluggish PC market, Microsoft’s Windows and device revenue saw a 3% year-over-year increase. This growth was fueled by a Windows 11 upgrade cycle and improved Windows OEM licensing revenue from PC manufacturers. Gartner reported a 4% uptick in global PC shipments, reflecting businesses preparing for Windows 10’s end-of-support in October.

Surface Devices and Xbox Add to Momentum

While Microsoft combined Windows and devices revenue reporting last year, CFO Amy Hood signaled that device revenue may decline in the next quarter. However, the recent launch of the 12-inch Surface Pro and 13-inch Surface Laptop could soften that impact as sales fully reflect in the coming months. Meanwhile, Xbox and gaming continue to contribute to Microsoft’s broader consumer segment, maintaining the company’s momentum across multiple product lines.

Microsoft Balances Growth and Workforce Adjustments

This earnings report comes just weeks after Microsoft laid off 9,000 employees, leaving its headcount at 228,000—matching 2024 levels. Despite workforce reductions, the company’s strong cloud and Windows performance reinforces its ability to adapt in a shifting tech market, positioning it for continued growth in 2026.