Microsoft’s Financial Performance and Strategic AI Spending
Microsoft (NASDAQ: MSFT) reported a record revenue of over $50 billion for the latest quarter, with a 17% increase year-over-year. Operating income rose by 21%, while adjusted earnings per share (EPS) surged 24%. However, the company faces pressures as its stock fell 10.5% after the second-quarter fiscal 2026 earnings report on January 28, reaching an eight-month low.
The company’s capital expenditures have soared to $37.5 billion in the recent quarter, with two-thirds earmarked for short-lived assets like GPUs and CPUs, reflecting a significant increase from $28.1 billion in fiscal 2023. Microsoft CEO Satya Nadella emphasized the need for this investment to support their AI initiatives, including the development of a custom AI chip called Maia 200 and the addition of 1 gigawatt of data center capacity.
Despite these advancements, concerns linger regarding the profitability of Microsoft’s AI investments. Approximately 45% of Microsoft’s $625 billion in remaining performance obligations are linked to OpenAI, raising questions about its revenue growth and the future of AI infrastructure needs.
