Microsoft Azure Sales Grow 43% as Custom AI Chips Boost Efficiency

Microsoft Corporation reported strong fourth-quarter fiscal year 2026 financial results, driven by a 43% year-over-year increase in sales for its Azure cloud computing business. The company ended its fiscal year with a cloud backlog of $678 billion, an 84% increase over the previous year.

CEO Satya Nadella announced a strategic transition toward custom AI chips to improve operational efficiency and increase margins for the cloud segment. Nadella stated that running MAI models on these proprietary chips yields 40% better performance per watt compared to external hardware.

This shift in hardware strategy aims to lower operating costs and reduce the company's historical reliance on external semiconductor suppliers such as Nvidia.