Microsoft (MSFT -1.64%) Azure's growth is accelerating in 2026, and much of that momentum is coming from agents writing code and handling other tasks -- workloads that drive higher cloud consumption.
Azure revenue grew 43% year over year in the fiscal fourth quarter ended June 30, 2026. Azure also surpassed $100 billion in full-year revenue, and CEO Satya Nadella suggested the strength is likely to continue.
At the Microsoft Build conference on June 2, 2026, Nadella called the rise of agents "a new paradigm." Unlike one-and-done chat interactions, agents can run continuously and work across a user's files and network. Azure is the cloud layer that powers those agents -- so more agent activity typically means more Azure usage.
Microsoft CEO Satya Nadella. Image source: Microsoft.
Higher agent usage drives more revenue for Azure
On its fiscal Q4 earnings call in July, management said customers were rapidly adopting Microsoft's database and analytics services to support AI agents. The number of customers using both Microsoft Fabric and Foundry -- a product that helps companies build custom agents -- grew 60% year over year last quarter.
Those Foundry-built agents run on Azure, creating a tailwind for cloud growth. The number of Foundry customers consuming 1 trillion tokens -- the small pieces of text that models read or write -- annually grew 4x versus the year-ago quarter.
CFO Amy Hood said additional Azure compute capacity brought online during the quarter was "quickly monetized," yet Azure remains supply-constrained. Microsoft expects Azure revenue to accelerate again to about 45% year over year on a constant-currency basis in fiscal Q1 2027.
NASDAQ: MSFT
Key Data Points
Microsoft helps enterprises run agents securely
Azure is still a relatively small portion of Microsoft's $332 billion in annual revenue, but it's growing at more than twice the pace of the overall company. To support demand, Nadella said Microsoft is "bringing capacity online faster than ever." That requires higher capital expenditures, but Microsoft is converting its revenue into higher cash flows. In the recent quarter, cash from operations rose 30% year over year to $55 billion in the quarter, supported by strong cloud billings and collections.
The stock fell earlier this year after investors worried that growing use of agents would lead to lower spending for its software and cloud services. However, the advantage for Microsoft is the trust it has spent years building with enterprises. Microsoft leaned into this advantage by introducing Agent 365, making it easier for companies to use the same security and governance controls they already use across Microsoft 365 and Azure for agents. Agent 365 has already registered 40 million agents within two months of launch.
The stock has rebounded but still trades at a reasonable forward earnings multiple of 25, which should help widen its competitive moat. With Azure's strong growth and surging cash flow, the stock still looks like an attractive investment.
