Key Points
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Microsoft reported a revenue of $81.3 billion for Q2 of fiscal 2026, with a non-GAAP net income of $30.9 billion, reflecting a 23% year-over-year increase.
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The Microsoft Cloud segment surpassed $50 billion in revenue for the first time, up 26% year-over-year.
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Despite strong growth, Microsoft’s stock is down approximately 19% year-to-date, exceeding the S&P 500’s 3% decline.
In the second quarter of fiscal 2026, Microsoft showcased robust performance with total revenue reaching $81.3 billion and a significant jump in non-GAAP net income to $30.9 billion, a year-over-year increase of 23%. The company’s cloud revenue exceeded $50 billion for the first time, marking a 26% increase from the previous year. However, Microsoft’s stock has dropped roughly 19% since the start of 2026, sharply contrasting with the broader S&P 500 index, which has seen only a 3% pullback.
While the company’s operations have generated strong cash flow, its free cash flow decreased to $5.9 billion, driven by heightened capital expenses related to its AI investments. These rising costs have begun affecting Microsoft’s profitability, with gross margins dipping to 68%. Despite the challenges, the company is optimistic, projecting third-quarter fiscal 2026 revenue between $80.65 billion and $81.75 billion — a midpoint suggesting about 16% growth year-over-year.
