Key Highlights

  • Microsoft declared a $0.98 quarterly Dividend on Sept. 15, up 8%, payable Dec. 10 to holders of record on Nov. 19.
  • Fiscal Q4 Revenue rose 18% to $90.0 billion; Azure grew 43% and, per Nadella, surpassed $100 billion in revenue for the fiscal year.
  • Microsoft guided to 45% constant-currency Azure growth and about $50 billion of Q1 capex under new Lease accounting.
  • Microsoft makes up about 8.53% of the Nasdaq-100, the index's third-largest constituent, with shares near $498.00 in the latest session.

Microsoft (NASDAQ:MSFT) raised its dividend 8% because its cloud and AI Business is generating enough profit to fund both record infrastructure spending and higher payouts to shareholders. On Sept. 15, the board declared a quarterly dividend of $0.98 per share, up 7 cents from the prior quarter, payable Dec. 10, 2026, to shareholders of record on Nov. 19.

The increase follows a fiscal year in which, in Chief Executive Officer Satya Nadella's words, "Azure revenue surpassed $100 billion for the first time." Azure and other cloud services revenue grew 43% in the quarter ended Jun. 30, and Microsoft Cloud revenue reached $59.3 billion, the company said in its Jul. 29 Earnings release.

At an annualized $3.92 per share, the new payout equals a Yield of roughly 0.8% based on the $498.00 share price in the latest session. Microsoft makes up about 8.53% of the Nasdaq-100, making it the index's third-largest constituent.

Inside the Sept. 15 Dividend Declaration

The dividend announcement was brief and routine in format, but the size of the increase is notable given how much the company is spending. Microsoft said the ex-dividend date will also be Nov. 19. It also scheduled its 2026 Annual Shareholders Meeting for Dec. 8, to be held virtually and hosted by Nadella, Chief Financial Officer Amy Hood, Vice Chair and President Brad Smith and lead independent director Sandra E. Peterson. Shareholders of record at the close of business on Sept. 30 will be entitled to vote.

The company returned $10.2 billion to shareholders through dividends and Buybacks in its fiscal fourth quarter, according to the Jul. 29 release. The new dividend rate keeps that commitment in place while Capital spending climbs sharply. The increase suggests the board is confident that cash generation from the cloud business can cover both the infrastructure build and a growing payout, even though free Cash Flow fell year over year in the latest quarter.

Azure Crosses $100 Billion

For the fiscal fourth quarter, Microsoft reported revenue of $90.0 billion, up 18%, and Operating Income of $40.6 billion, also up 18%. GAAP Net Income rose 31% to $35.8 billion, or $4.81 per diluted share, while non-GAAP earnings, which exclude the impact of its OpenAI investments, rose 22% to $4.74 per share. The company said discrete items, including a $3.2 billion gain from its Investment in Anthropic, added $0.27 per share relative to its earlier guidance.

For the full fiscal year 2026, revenue rose 18% to $331.8 billion, operating income rose 21% to $155.2 billion and GAAP Diluted Earnings per Share climbed 32% to $17.95.

Growth was driven by the cloud. The Intelligent Cloud segment generated $39.3 billion, up 32%, and commercial remaining performance obligation, a measure of contracted future revenue, jumped 84% to $678 billion. Nadella also said Microsoft 365 Copilot has passed 30 million paid seats. Productivity and Business Processes revenue rose 14% to $37.8 billion. Within that segment, Microsoft 365 Commercial cloud revenue grew 14% as reported, or 16% after adjusting for a prior-year revenue recognition benefit, while LinkedIn revenue rose 12% and Dynamics 365 revenue rose 13%. Search Advertising revenue excluding traffic Acquisition costs increased 10%. The weak spot was More Personal Computing, where revenue fell 4% to $12.9 billion as Windows OEM and devices revenue dropped 7% and Xbox content and services revenue fell 10%.

Guidance and the Capital Spending Question

Microsoft guided to fiscal first-quarter revenue with a midpoint of $90.4 billion, above the LSEG consensus of $89.66 billion, and forecast Azure growth of 45% in constant currency, ahead of the roughly 41% analysts expected.

Spending remains the central debate. Microsoft said it would now spread long-term Data Center leases over 25 years instead of 15, which lowers its reported capital expenditures. On that basis, it expects about $50 billion of capital spending in the first quarter and $175 billion for calendar 2026, below its previous calendar-year estimate of $190 billion. The company said its underlying spending plans remain unchanged. Fourth-quarter capital expenditures were $41 billion, up more than 70% from a year earlier, and free cash flow of $19.6 billion was down 23%.

Competing With Google Cloud and Amazon

Microsoft remains the No. 2 cloud provider behind Amazon Web Services (NASDAQ:AMZN), but the competitive gap is shifting. Google Cloud revenue surged 82% in the quarter Alphabet (NASDAQ:GOOGL) reported the week before Microsoft's results. Microsoft is responding by building its own models and chips alongside its partnerships. Nadella told analysts the company is designing models and silicon that deliver efficiency gains of up to 40%, and said customers should be able to choose AI technologies based on cost and performance.

Risks to Watch

The main risk is the scale of investment. Microsoft's outlays are part of roughly $700 billion in Big Tech AI spending that has strained cash flows and raised concerns about overbuilding capacity. The lease accounting change makes reported capital expenditures look lower without altering the actual spending plan, which investors will need to take into account when comparing periods.

Other pressures include declines in the Xbox and Windows OEM businesses, the earnings Volatility tied to its OpenAI and Anthropic investments, and competition from Google Cloud's rapid growth. A modest Dividend Yield also means the payout is a small part of the stock's total return profile, which still depends mainly on cloud growth.

Key Dates on Microsoft's Shareholder Calendar

Several dates are already set. Shareholders of record on Sept. 30 can vote at the Dec. 8 annual meeting, the stock goes ex-dividend on Nov. 19 and the $0.98 dividend is paid on Dec. 10.

Microsoft's fiscal first-quarter results are typically released in late October, although the date has not been confirmed. That report will show whether Azure reaches the 45% constant-currency growth rate management guided to and how reported capital spending compares with the roughly $50 billion forecast under the new lease accounting.