Microsoft Earnings Report Overview
Microsoft (NASDAQ: MSFT) reported $81.3 billion in revenue for the second quarter of fiscal 2026, up 17% year over year. Notably, the intelligent cloud segment, which includes Azure, generated $32.9 billion—a 29% increase, with Azure services specifically rising 39% compared to the previous year. However, the company’s capital expenditures surged to $37.5 billion, a 66% increase, raising concerns among analysts, especially as operating cash flow fell short at $35.8 billion.
Following the earnings release, Microsoft’s stock experienced a drop of over 10%, marking its lowest valuation during the AI revolution at a forward price-to-earnings (P/E) ratio of 26. Additionally, Microsoft’s remaining performance obligations (RPO) soared 110% year over year to $625 billion, with 45% tied to OpenAI, indicating a significant investment in AI despite rising costs.
