Microsoft Q2 Earnings Beat Estimates as Cloud and AI Drive Results

Core Insights - Microsoft reported second-quarter fiscal 2026 earnings of $4.14 per share, exceeding estimates by 6.7% and showing a 24% year-over-year increase [1] - Revenues reached $81.3 billion, a 17% year-over-year growth, surpassing estimates by 1.3% [1] - Commercial bookings surged 230%, driven by significant Azure commitments and large contracts [2] Financial Performance - Microsoft Cloud revenues totaled $51.5 billion, growing 26% year over year, with a gross margin percentage of 67% [3] - Operating income reached $20.6 billion, with an operating margin of 60.4% [9] - Gross profit was $55.3 billion, up 15.6% year over year, with a gross margin of 68% [20] Segment Performance - The Productivity & Business Processes segment generated $34.1 billion in revenues, growing 16% year over year [5] - Intelligent Cloud segment revenues were $32.9 billion, reflecting a 29% year-over-year growth [9] - More Personal Computing segment revenues decreased 3% year over year to $14.3 billion [13] AI and Technology Advancements - Microsoft expanded its AI infrastructure, serving over 80,000 organizations, including 80% of Fortune 500 companies [16] - The company reported 900 million monthly active users of AI features, with over 150 million using first-party Copilots [17] - Microsoft Fabric revenues grew 60%, with SQL Database hyperscale revenues increasing nearly 75% [18] Capital Expenditure and Guidance - Capital expenditures totaled $29.9 billion, with expectations for a decrease in the next quarter [23] - For Q3 FY26, total revenues are projected between $80.65 billion and $81.75 billion, indicating growth of approximately 15% to 17% [27] - The company anticipates remaining capacity-constrained through at least fiscal year-end, impacting revenue opportunities for Azure [29][30]