Microsoft Corporation Reports Growth in AI and Cloud Revenue

Microsoft Corporation has revealed a remarkable increase in profits for the second quarter of the 2026 fiscal year, primarily due to the swift uptake of artificial intelligence and exceptional results in its cloud services.

Financial Highlights for Q2 2026

The organisation disclosed that revenue for the quarter ending 31 December 2025 reached $81.3 billion, marking a 17% rise compared to the same period last year.

Net income also witnessed a substantial boost, escalating by 60% to $38.5 billion.

Cloud Division Performance

The Microsoft Cloud division emerged as the standout performer, achieving over $50 billion in quarterly revenue for the inaugural time, climbing to $51.5 billion in FY26 Q2 from $40.9 billion in FY25 Q2.

Comments from the CEO

Chief Executive Satya Nadella described the performance as the initial stages of AI diffusion, highlighting that the firm is effectively translating its significant investments in artificial intelligence into real business benefits.

AI Business Growth

Nadella mentioned that the company has constructed an AI business that now surpasses some of its longest-established franchises and noted the substantial cloud revenue surmounting $50 billion.

Azure Cloud Platform Expansion

Azure, Microsoft’s premier cloud service, has expanded by 39% as businesses increasingly migrate their operations to the cloud in order to leverage advanced AI utilities.

Capital Expenditure Insights

Capital expenditure for this quarter hit $37.5 billion, representing a 66% increase. Microsoft indicated that nearly two-thirds of this investment is allocated to CPUs and GPUs for data centres essential for advancing AI technologies.

Segment Performance Overview

While the “Intelligent Cloud” and “Productivity” sectors flourished, the “More Personal Computing” segment, encompassing Xbox and Windows, experienced a 5% fall in revenue. Xbox hardware revenue saw a significant decline of 32%.

Nonetheless, with Windows 11 now active on over one billion devices, Microsoft continues to maintain a substantial global presence.