Microsoft 2026 Q2 Earnings: Growth for AI, cloud, and business apps as expenditures rise

Microsoft reported Q2 2026 financial performance today with earnings per share of $5.16 on revenue of $81.3 billion, exceeding analyst estimates.

In announcing the results, CEO Satya Nadella touted the results as just the “beginning phase of AI diffusion.” He described pushing the frontier across the AI stack to drive value. 

“Microsoft Cloud revenue crossed $50 billion this quarter, reflecting the strong demand for our portfolio of services,” said Amy Hood, executive vice president and chief financial officer of Microsoft, in a statement.

Capital expenses reached $37.5 billion, up 66% and exceeding spending estimated by analysts. The company stated that roughly two-thirds of expenditures were for short-lived assets like GPUs and CPUs.

Among key products, Microsoft reported:

• Azure and other cloud services revenue grew 39%.
• Dynamics 365 grew 19%.
• Microsoft 365 Commercial revenue grew 17%.

Last quarter, Microsoft reported Q1 2026 financial performance of $3.72 on revenue of $77.7 billion, exceeding analyst expectations. Azure and other cloud services revenue grew 40%.

Q4 of 2025 saw Microsoft exceed expectations on EPS of $3.65 on revenue of $76.4 billion. Dynamics products and services were up 18% at that time, powered by Dynamics 365 revenue growth of 23%.

Microsoft's stock dropped over 6% in after hours trading on the mixed news of higher earnings and growth in AI and cloud expenditure.