Microsoft Shifts Cloud Growth Focus to Usage-Based Pricing
Microsoft's cloud growth story has undergone a significant shift in focus over the past two years. What was once centered on cloud migrations is now primarily driven by usage-based pricing and consumption.
The company's management no longer emphasizes cloud migrations as a key driver of growth, instead highlighting agents, model choice, and usage meters. This pivot has contributed to the company's sustained growth, with revenue reaching $331 billion in fiscal 2026, up 18% from the previous year.
Azure's usage revenue is capacity-bound, but demand still outpaces available capacity. In contrast, Copilot revenue on GitHub accelerated over 60% quarter-over-quarter, while Intelligent Cloud gross margin improved despite the shift to usage-based pricing.