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Microsoft Cloud and AI Momentum Drives Strong Second Quarter Results
Microsoft reported strong second-quarter fiscal 2026 results, driven by continued demand for cloud and AI services across its portfolio. Revenue for the quarter ended Dec. 31, 2025, rose 17 percent year over year to $81.3 billion, while operating income increased 21 percent to $38.3 billion. Net income on a GAAP basis climbed 60 percent to $38.5 billion, reflecting both operating performance and gains related to investments, according to the company.
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Figure 1. MS Q2 FY26 Earnings
Microsoft Cloud revenue surpassed $51.5 billion, up 26 percent, with Azure and other cloud services growing 39 percent. Productivity and Business Processes revenue increased 16 percent to $34.1 billion, supported by gains in Microsoft 365 and Dynamics 365, while Intelligent Cloud revenue jumped 29 percent to $32.9 billion. More Personal Computing declined slightly by 3 percent as Xbox content and services softened.
The results underscore Microsoft’s positioning as enterprises accelerate AI adoption. Sustained Azure growth and a $625 billion commercial remaining performance obligation signal durable demand. Net income on GAAP basis increased by 60 percent with diluted earnings per share also up 60 percent. For enterprise IT leaders, the quarter highlights how cloud infrastructure and AI platforms are becoming core drivers of both technology investment and vendor financial performance.
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Posted by Redmond Channel Partner magazine staff on January 29, 2026