Microsoft’s Fiscal Q2 Results and Outlook
Microsoft (NASDAQ: MSFT) is set to report its fiscal Q3 earnings after the market closes on April 29. The company experienced a robust fiscal Q2 for 2026, with revenue increasing 17% year over year to $81.3 billion and operating income rising 21% to $38.3 billion. Non-GAAP earnings per share saw a notable 24% year-over-year growth.
In the second quarter, Microsoft’s Azure and other cloud services revenue surged by 39%, contributing to a total intelligent cloud revenue jump of 29% to $32.9 billion. Notably, the company’s commercial remaining performance obligations (RPO) doubled to $625 billion, with an expected 25% of that amount to be recognized as revenue over the next year.
While positive, the fiscal outlook is tempered by rising capital expenditures, which drove down free cash flow to $5.9 billion and projected a decrease in cloud gross margin to about 65% due to ongoing investments in AI. Additionally, Microsoft faces heightened competition from Amazon Web Services and Google Cloud, both of which have announced significant capital expenditures to enhance their offerings in cloud computing and AI.
