MSFT · 10-K · 2026A · Full report

AI Infrastructure Investment

MICROSOFT CORP · 2026-07-29 · Importance 64 · Surprise 42 · In source text

Microsoft increased additions to property and equipment by $51.4 billion in fiscal year 2026, contributing to a $139.5 billion increase in cash used in investing activities. Management expects continued capital expenditures for cloud growth, AI training, datacenters, computer systems, and related infrastructure. Fiscal 2026 cost of revenue increased $18.5 billion, including investments in Microsoft Cloud infrastructure, while Microsoft Cloud gross margin declined to 66% because of AI infrastructure investment and higher AI product usage. As of June 30, 2026, Microsoft had $34.6 billion of construction commitments and $194.1 billion of purchase commitments, primarily related to datacenters and take-or-pay contracts.

Key facts

• Cost of revenue for Intelligent Cloud increased $17.7 billion or 44% in fiscal year 2026 driven by investments in AI infrastructure to support growing customer demand. source
• Cash used in investing increased $66.9 billion to $139.5 billion for fiscal year 2026, primarily due to a $51.4 billion increase in additions to property and equipment and a $22.2 billion increase in cash used in other investing primarily to facilitate the purchase of components. source
• Cost of revenue for Productivity and Business Processes increased $2.6 billion or 12% driven by investments in AI infrastructure to support Microsoft 365 Copilot seat and usage growth. source

Impact estimates