Microsoft Cloud surpasses $50 billion milestone amid global AI surge; Profits up in Q2 26

Microsoft Corporation has announced a remarkable increase in profits for the second quarter of its 2026 fiscal year, largely propelled by the swift adoption of artificial intelligence and an unprecedented performance in its cloud services. For the quarter ending December 31, 2025, the company reported a revenue of $81.3 billion, marking a 17% rise compared to the same period last year. Net income experienced a significant boost, soaring 60% to reach $38.5 billion. The crown jewel of this financial report was the Microsoft Cloud division, which achieved a monumental milestone by surpassing $50 billion in quarterly revenue for the first time, reporting $51.5 billion in FY26 Q2, up from $40.9 billion in FY25 Q2. Chief Executive Satya Nadella hailed these results as indicative of the "beginning phases of AI diffusion," emphasizing the company's success in transforming its substantial investments in artificial intelligence into real business value. Nadella stated, "We are still in the beginning phases of AI diffusion and its broad GDP impact, and already we’ve built an AI business that is larger than some of our biggest franchises that took decades to build." The Azure cloud platform, Microsoft’s flagship service, experienced a remarkable 39% growth as businesses increasingly migrate their operations to the cloud to leverage new AI capabilities. Capital expenditure for the quarter reached $37.5 billion, a 66% increase, with approximately two-thirds directed towards CPUs and GPUs for data centers crucial for powering the upcoming generation of AI technologies. While the "Intelligent Cloud" and "Productivity" sectors thrived, the "More Personal Computing" segment, which encompasses Xbox and Windows services, faced a 5% decline in revenue. Xbox hardware sales saw a sharp drop of 32%. Nevertheless, with Windows 11 now installed on over one billion devices, Microsoft continues to maintain a substantial global presence.