What happened
Microsoft published its results on October 28, two days after announcing the voluntary exit offer on October 26. The timing put the two stories side by side: record-scale earnings on one hand, and an invitation for roughly a quarter of the workforce to consider leaving on the other.
Chief executive Satya Nadella said the company was delivering greater capability, choice, control and cost-efficiency for customers across its products. The message to investors was that spending on cloud and AI is turning into financial results, not just promises.
The numbers behind the beat
The strongest driver was Azure, Microsoft’s cloud computing business. Azure revenue grew 48% in the quarter, and Microsoft disclosed Azure revenue of $33.17 billion, above the $32.32 billion analysts had projected.
Microsoft Cloud revenue rose 30% to $63.9 billion. Operating income increased 21% to $45.9 billion. The company’s new reporting structure groups much of this under Agents and Infra, which reported revenue of nearly $76.8 billion, up almost 25%.
Table: Total revenue – Actual $92.3 billion, Expected about $90.6 billion. Profit – Actual more than $36.6 billion, Expected about $35.1 billion. Azure revenue – Actual $33.17 billion, Expected $32.32 billion. Adjusted earnings per share – Actual $4.89, Expected $4.73.
Those figures explain why the shares rose after hours following the announcement. Investors had been watching for proof that heavy AI spending is paying off, and this quarter gave them a clear answer on revenue growth.
The 60,000 buyouts: what they are — and what they are not
The most important detail about the buyouts is also the most misunderstood. About 60,000 employees are eligible for the voluntary offer. That is not the same as 60,000 job losses. Microsoft has not said how many people will accept, nor how much the programme will cost in severance.
The offer covers eligible employees in the United States, Canada, India and the United Kingdom, at level 70 and below. Teams included span Copilot and AI experiences, Windows and devices, Xbox, finance and human resources. Marketing, commercial business and security divisions are excluded, and participation varies by business unit.
Chief People Officer Amy Coleman said the initiative gives eligible employees considering opportunities outside the company a supported route to leave, while letting business units adjust their workforces to changing needs. Microsoft had about 223,000 employees at the end of June, down from 228,000 at the end of 2025.
This is the second such offer this year. In April, Microsoft gave about 7% of its United States workforce the option to retire early. Earlier restructuring also cut about 4,800 positions in July, including roles in Xbox.
Why a profitable company is cutting costs
The answer lies in what AI now costs to build. Microsoft reported $45.2 billion in capital expenditure and finance leases during the quarter, up 30% from a year earlier, as it builds data centres and buys chips to meet AI demand.
For the fiscal second quarter, Microsoft guided revenue of $96 billion to $97.1 billion, with capital expenditure aimed at more than $50 billion. Reports put projected calendar 2027 capital spending at about $170 billion, reflecting continued capacity pressure.
That scale of spending is the wider story across big technology companies. As with Nvidia’s $3 billion investment in Meta’s AI partnership, the race to build AI capacity is pushing even highly profitable firms to reshape their workforces and control other costs.
At the same time, Microsoft is pushing AI closer to the device itself, including a new Surface Ultra laptop with Nvidia AI chips priced at more than $2,500, so that some work no longer depends entirely on remote data centres. The company also set up an AI implementation unit and unveiled a Copilot AI super app with coding abilities during the quarter.
What it means for workers
For employees, the offer is voluntary, and that choice matters. Some may welcome a supported exit with financial support and career planning resources. Others may worry about what comes next if too few people accept, or whether further restructuring follows.
Microsoft has not established that AI automation directly replaced the roles covered by the programme, and it has not disclosed expected savings. Severance creates upfront costs even as voluntary departures could reduce recurring payroll costs later. Losing experienced staff also carries longer-term operational risks that will only become clear over time.
What happens next
Three things will decide how this story is judged. First, how many of the 60,000 eligible employees actually accept the offer. Second, whether Microsoft’s next quarter hits its $96 billion to $97.1 billion revenue guidance while capital spending stays above $50 billion. Third, whether Azure growth stays near its current pace as capacity expands.
Investors will also watch margins closely. Strong demand for AI services is generating revenue, but delivering those services requires substantial investment in data centres, chips and computing capacity. The central question is no longer whether AI demand is growing, but whether that growth generates returns large enough to justify its rising cost.
Timeline
- April 2026: Microsoft offers early retirement to about 7% of its United States workforce.
- July 2026: About 4,800 positions are cut, including Xbox roles.
- October 26, 2026: Voluntary exit offer announced for about 60,000 eligible employees in the US, Canada, India and the UK.
- October 28, 2026: Fiscal first-quarter results published — $92.3 billion revenue, more than $36.6 billion profit, Azure up 48%.
- Next quarter: Microsoft guides revenue of $96 billion to $97.1 billion, with capital expenditure above $50 billion.
Frequently asked questions
Did Microsoft lay off 60,000 people? No. About 60,000 employees are eligible for a voluntary buyout offer. Microsoft has not disclosed how many will accept, so the final number of departures will be lower unless the company takes further action.
How much money did Microsoft make this quarter? Microsoft reported $92.3 billion in revenue and more than $36.6 billion in profit for the three months ending September 30, beating analyst expectations on both measures.
Why did Azure grow so fast? Azure revenue grew 48% as businesses continued shifting computing to the cloud and investing in AI services running on Microsoft’s infrastructure. Azure revenue was $33.17 billion for the quarter.
Which employees are covered by the buyout offer? Eligible employees in the United States, Canada, India and the United Kingdom at level 70 and below, including teams working on Copilot, Windows, Xbox, finance and human resources. Marketing, commercial business and security divisions are excluded.
What is Microsoft spending on AI? Microsoft reported $45.2 billion in capital expenditure and finance leases in the quarter, up 30% from a year earlier, and guided to more than $50 billion in the next quarter as it builds data centres and buys chips.
Will Microsoft keep growing next quarter? Microsoft guided fiscal second-quarter revenue of $96 billion to $97.1 billion. Whether it hits that range, and whether Azure growth holds up, will be the next test for investors.
Related coverage: Nvidia invests $3 billion in Meta’s AI partnership — and see the Business section for more business news.