Microsoft Reports Q2 Results Amid AI Concerns
Microsoft (NASDAQ: MSFT) reported its fiscal 2026 second quarter results on January 28, revealing a 22% decline from its all-time stock high. The company faced investor concerns about its Copilot virtual assistant and Azure cloud platform, despite overall strong results. The company traded with a price-to-earnings ratio of 26.5, its lowest in three years, presenting a potentially attractive investment opportunity.
In the recent quarter, businesses purchased only 15 million Copilot licenses for Microsoft 365, a modest growth of 3.7% penetration from the prior year. However, Azure revenue did grow 39% year-over-year, but this was below previous growth rates and led to worries about sustaining momentum. Microsoft’s data center capacity backlog reached $625 billion, with 45% attributed to commitments from OpenAI.
Overall, the performance in AI-related sectors prompted a sharp drop in Microsoft’s stock. Analysts are debating whether the current valuation represents a buying opportunity as the company continues investing significantly in AI infrastructure for future growth.
