**Microsoft Reports Q2 Earnings but Shares Plummet**
Microsoft (NASDAQ: MSFT) reported its fiscal Q2 earnings on [date not specified], posting a revenue of $81.3 billion, a 17% increase, and operating income of $38.3 billion, up 21%. Adjusted earnings per share rose 24% to $4.14. However, despite these positive results, Microsoft experienced a significant drop in stock value, falling by over 20%, wiping out more than $400 billion from its market capitalization, amidst investor concerns about rising capital expenditures related to AI infrastructure and slowing growth in its consumer business.
The company projected flat revenue growth for Q3, predicting $80.65 billion to $81.75 billion, which represents a 15%-17% increase year-over-year. Costs of goods sold are expected to rise by 22%-23%, impacting profit margins. In contrast, revenue from Azure, its cloud computing service, increased by 39%, with expectations for continued growth in the coming quarters.
Microsoft is currently trading at a P/E ratio of 25 based on fiscal 2026 estimates. Despite the recent downturn, analysts remain optimistic about the company’s long-term prospects, citing strong growth potential in its cloud division and a rising backlog of $625 billion, indicating robust future demand.
