What is Microsoft's product — cost of goods sold?

Microsoft (MSFT) reported product — cost of goods sold of $2.73B in Q1 2026.

How has Microsoft's product — cost of goods sold changed year-over-year?

Microsoft's product — cost of goods sold decreased by 10.0% year-over-year, from $3.04B to $2.73B.

What is the long-term trend for Microsoft's product — cost of goods sold?

Over 4 years (2021 to 2025), Microsoft's product — cost of goods sold has grown at a -7.2% compound annual growth rate (CAGR), from $18.22B to $13.50B.

What does product — cost of goods sold mean?

The total direct cost of making and delivering physical products like computers and game consoles, plus the costs of producing traditional software.

Products & Services · Cost of Goods Sold

Product — Cost of Goods Sold

Microsoft Product — Cost of Goods Sold decreased by 22.0% to $2.73B in Q1 2026 compared to the prior quarter. Year-over-year, this metric declined by 10.0%, from $3.04B to $2.73B. Over 4 years (FY 2021 to FY 2025), Product — Cost of Goods Sold shows a downward trend with a -7.2% CAGR. This is a positive signal — lower values indicate better performance for this metric.

Analysis

StatementSegment

CategoryEfficiency

SignalLower is better

VolatilityModerate

First reportedQ1 2016

Last reportedQ3 2026Apr 29, 2026

Rolls up toTotal Cost of Revenue

How to read this metric

A decrease in this metric relative to revenue typically signals improved manufacturing scale, lower component costs, or a favorable shift toward higher-margin software products.

Detailed definition

This metric represents the direct costs associated with manufacturing and distributing physical goods and licensing pack...

Peer comparison

Similar to the cost of sales for hardware at Apple or the cost of revenue for physical products at Sony and Alphabet.

Metric ID: msft_segment_product_cost_of_goods_and_services_sold

Historical Data

20 periods

	Q4 '21	Q1 '22	Q2 '22	Q3 '22	Q4 '22	Q1 '23	Q2 '23	Q3 '23	Q4 '23	Q1 '24	Q2 '24	Q3 '24	Q4 '24	Q1 '25	Q2 '25	Q3 '25	Q4 '25	Q1 '26	Q2 '26	Q3 '26
Value	$4.29B	$3.79B	$6.33B	$4.58B	$4.36B	$4.30B	$5.69B	$3.94B	$3.87B	$3.53B	$5.96B	$4.34B	$1.44B	$3.29B	$3.86B	$3.04B	$3.31B	$2.92B	$3.51B	$2.73B
QoQ Change	—	-11.5%	+67.0%	-27.6%	-5.0%	-1.3%	+32.3%	-30.7%	-1.8%	-8.8%	+68.9%	-27.2%	-66.9%	+129.1%	+17.1%	-21.2%	+9.1%	-11.8%	+20.0%	-22.0%
YoY Change	—	—	—	—	+1.6%	+13.4%	-10.1%	-14.0%	-11.2%	-17.9%	+4.8%	+10.1%	-62.9%	-6.7%	-35.3%	-30.0%	+130.5%	-11.3%	-9.1%	-10.0%

Range$1.44B – $6.33B

CAGR-9.0%

Avg YoY Growth-3.6%

Median YoY Growth-10.1%

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Frequently Asked Questions

What is Microsoft's product — cost of goods sold?: Microsoft (MSFT) reported product — cost of goods sold of $2.73B in Q1 2026.
How has Microsoft's product — cost of goods sold changed year-over-year?: Microsoft's product — cost of goods sold decreased by 10.0% year-over-year, from $3.04B to $2.73B.
What is the long-term trend for Microsoft's product — cost of goods sold?: Over 4 years (2021 to 2025), Microsoft's product — cost of goods sold has grown at a -7.2% compound annual growth rate (CAGR), from $18.22B to $13.50B.
What does product — cost of goods sold mean?: The total direct cost of making and delivering physical products like computers and game consoles, plus the costs of producing traditional software.