Anyone who works for, or closely with, Microsoft will be aware that their fiscal year starts on 1st July. The first couple of months of the new FY are typically consumed with reorganization, internal or channel sales kickoff type events (like MCAPS Start for Partners) then going on summer holiday. Basically, the year starts for lots of people in September.
If you are a partner company to Microsoft – or any other major company for that matter – it pays to be very aware of where they are in their FY cycle. John Rudow, who has artfully managed to sell more-or-less the same kind of training materials to different roles within Microsoft for 20 years, recommends figuring out what the “mutual operating period” is – in other words, when is each company thinking about plans for the next year vs heads-down in execution?
Since Microsoft’s Q4 is April-June, if your FY is April – March, don’t be surprised if the first half of your year is pretty much gone before you can hit the sweet spot of working alongside Microsoft. If you’re trying to get Microsoft’s attention for what you do, then the end of June is a bad time, as everyone in their sales organization is running around trying to get stuff over the line.
FY26 is a wrap
The results for the FY ending 30 June 2026 have just been announced; if you’re a shareholder then you’re probably smiling. The pattern often seems to be that the company announces record results (at least using the measures it chooses to report) and the share price falls, because the upside is already supposedly priced in and there’s often a downside that can be dwelt on. Lots of capital expenditure on AI datacenters but not enough uptake of Copilot? Tsk tsk. Azure growth slowing from stratospheric to merely incredible? Oh dear!
This time round, the FY26 Q4 results were pretty stellar and beat analyst expectations in a number of areas –
- Revenue was $90Bn, up 18% from the previous year; analysts were expecting around $87Bn
- Adjusted Earnings per share (EPS) was $4.74, up 23% YoY; analysts expected around $4.30.
- “Intelligent Cloud” revenue grew to $39.3Bn, up 32% vs expectations around $38Bn.
- “Productivity & Business Processes” revenue $37.8B, up 14% YoY, against expectation of around $37B
- “More Personal Computing” actually fell 4% at $12.9B, but remained slightly ahead of expectations.
There were a few standout metrics in both Q4 (which everyone knows is the busy time for Microsoft as customer deals tend to slide into June) and for FY26 as a whole, like Azure selling over $100Bn in the year, growing 43% YoY for Q4. That is insane levels of growth on an already large and mature business.
Here is the detail of Microsoft’s Q4 release; fine if you like eating dry crackers for your mid-morning snack. If you prefer more-digestible chocolatey biscuits, check out Jack Rowbotham’s excellent post which also includes AppEconomyInsights’ great summary diagram to show where the money comes from and where it goes.
The 3 year picture
For the full FY26 fiscal year, the Big Dog is actually Productivity & Business Processes, which includes most of M365, Dynamics, and LinkedIn). Over the last 3 years, it’s grown $33Bn in revenue and an incredible $24Bn in income.
Intelligent Cloud managed to add $51Bn in revenue over the same time, though income has “only” grown by $19Bn. It shows you where the real margin is.
Even if the news wasn’t quite as bad as analysts were expecting, More Personal Computing has been pretty flat over the 3 years; that includes Xbox consoles and games/services, Surface devices as well as the revenue from all those lovely adverts you might see in Widgets, Bing, MSN and the likes. Oh, and Windows. Let’s not forget about that – the cornerstone of the whole company, without which there would be no Microsoft today.
They don’t break out how much revenue or profit is delivered by Windows client (Server sits in Intelligent Cloud) – but it’s going to be pretty high margin stuff. Analysts reckon that Windows delivers about 5% of all revenue, but that profit for this year would be in the $10Bn region. Breaking out Windows from More Personal Computing makes things interesting.
So, Microsoft still makes a load of cash from Windows, even though it’s not exactly been strategically front and centre in recent years. Office and all its hangers on in M365 is insanely profitable and Azure, with its $100Bn+ annual revenues, is a cash printing machine.
Share price & market value
In May 2025, Tip of the Week #76 commented that Microsoft had the largest market capitalization of any company – a total value of $3.33 trillion, marginally ahead of Apple at $3.2T and NVIDIA “only” $10B behind in third. Amazon was a seemingly distant 4th at $2.24T (so around $1T less that Apple), while Alphabet/Google was 5th at around $2T.
Exactly a year later from ToW #76, Google’s share price was nearly 2.5x what it had been previously, meaning their market cap was $4.8T. By any measure, that kind of growth is remarkable. NVIDIA was sitting at $5.5T, and has grown by nearly 10x over the last 5 years.
Source – Stock Analysis Market Capitalization comparison
And since Market Cap is the number of outstanding shares multiplied by share price, the comparisons of share price show a similar picture. As of mid-afternoon UK time, 4 August:
Source: Stock Analysis stock price comparison
Traditional valuation of stock prices would be based on things like P/E ratio, the forward outlook (like are they seeing great opportunity or declining sales, are they spending more than they earn etc) but actual logic and share prices seem to have been divergent for a long time. Surely there’s a bubble here; Google/Alphabet’s share price on 15 May 2026 was $393.32. On 15 May 2023 it was $116.96.
Between FY23 [since Alphabet’s fiscal year is the calendar, useful info you need to have a Mutual Operating Period?] and FY25, they grew revenue by 31% and operating income by 53% – remarkable numbers. But should they justify the company being nearly 3x more valuable today ($4.55T) than they were 3 years ago ($1.61T)? Even if there’s a crash and all of these multi-trillion companies shed 2/3 of their value, will they still be over-valued compared to others who don’t inhabit the same spheres?
Look at car makers for comparison – here’s the market cap for Ford, General Motors, BMW, Mercedes and Volkswagen over the last 5 years:
Stock Analysist Market Capitalization over 5 years
But add Tesla to the mix:
Those 5 traditional car companies have a combined market cap of around $250Bn, while Tesla’s is 5 times that. Yet the traditional manufacturers’ combined revenue is 10 times that of Tesla and operating income (EBIT) is estimated to be slightly better for the traditional automakers – it’s about 11x that of Tesla.
Now, traditional car companies are losing money on lots of new endeavours so even if their top line looks healthy, the future is a lot less promising.
But still; how can the market see be such a big gap in valuations? Answers on a postcard, please…
