Microsoft has made a new commitment regarding its data centers. The company said earlier this week it will cover the cost of its data center energy needs. It also pledged to replenish more water than it uses and to increase local tax revenues.
Microsoft President Brad Smith stated the tech giant will arrange deals with utilities in advance. This will allow utilities to upgrade infrastructure without passing electricity costs to consumers. U.S. President Donald Trump praised Microsoft, calling it the first tech company to make such a promise.
The announcement comes as data centers multiply across the United States. These centers power cloud computing and generative artificial intelligence. Local communities have expressed growing concern about strained power grids and rising utility costs.
Microsoft reported its first-quarter earnings for fiscal 2026 on October 29. Revenue was $77.7 billion, an 18% increase from the prior year. This exceeded analyst expectations of $74.96 billion. Adjusted earnings per share were $4.13, up 23% year-over-year.
The Intelligent Cloud division, which includes Azure, recorded $30.9 billion in revenue. This represents a 28% year-over-year increase. Azure itself grew by 40%. The Productivity and Business Processes segment revenue rose 17% to $33 billion. The More Personal Computing segment climbed 4% to $13.8 billion.
During the quarter, Microsoft returned $10.7 billion to shareholders through dividends and stock repurchases. However, capital expenditures reached $34.9 billion in the first quarter. This is a 74% increase from a year earlier. Chief Financial Officer Amy Hood indicated capital expenditure growth in fiscal 2026 would outpace that of 2025.
Following the earnings report, Microsoft's stock dropped around 3% on October 30. Investors focused on the company's rising spending. The stock has declined 5% year-to-date in 2026. This contrasts with the broader S&P 500 Index, which has gained 1.4% so far this year.
For the second quarter of fiscal 2026, Microsoft projects revenue between $79.5 billion and $80.6 billion. The company is set to report those results on January 28.
Wall Street analysts maintain strong confidence in Microsoft. The stock has a "Strong Buy" consensus rating. Out of 48 analysts covering the stock, 39 recommend "Strong Buy," five suggest "Moderate Buy," and four suggest "Hold." The average price target is $629.50, with the most bullish estimate at $690.