Microsoft built its fortune on Windows and Office. Now cloud computing and artificial intelligence drive its growth. Here’s how one of the world’s most valuable companies makes its money.
Microsoft was founded in 1975 by Bill Gates and Paul Allen. Its Windows operating system and Office software made it the dominant force in personal computing for decades.
Under chief executive Satya Nadella, who took over in 2014, it shifted its focus to cloud computing, and that bet has made it one of the most valuable companies in the world.
In its 2026 financial year, which ended in June 2026, Microsoft reported revenue of US$331.8 billion, up 18 per cent, and operating income of US$155.2 billion.
Three main businesses
The biggest growth engine is Azure, its cloud computing platform. Businesses rent computing power, storage and AI tools from Microsoft’s data centres instead of running their own servers. Azure revenue passed US$100 billion for the first time in the 2026 financial year, and grew 43 per cent in the final quarter. It competes mainly with Amazon Web Services and Google Cloud.
Its productivity business includes Microsoft 365, the subscription version of Office with Word, Excel, Outlook and Teams, along with LinkedIn and Dynamics business software. Most of this income comes from businesses paying a monthly fee per user, which makes it reliable and highly profitable. Microsoft is adding AI assistants, branded Copilot, to these products, often at an extra cost.
Its personal computing business includes Windows, Surface devices, Bing search advertising and Xbox gaming. Microsoft bought games publisher Activision Blizzard, maker of Call of Duty, in 2023 for about US$69 billion.
OpenAI and the AI bet
Microsoft has invested billions of dollars in OpenAI, the company behind ChatGPT, and holds a large stake in it. OpenAI’s models power many of Microsoft’s AI products, and OpenAI is a major customer of Azure.
To meet demand for AI, Microsoft is spending enormous sums building data centres and buying chips. Investors are watching closely to see whether that spending produces enough extra revenue to justify it.
The risks include slowing demand for AI, intense competition in cloud computing, regulatory scrutiny of its size and its OpenAI partnership, and the possibility that its spending runs ahead of what customers are willing to pay for.
