Microsoft reported strong second-quarter fiscal 2026 results, driven by accelerating demand for Cloud and AI services across its portfolio. Revenue rose 17% year over year to $81.3 billion, while operating income increased 21% to $38.3 billion, reflecting solid operating leverage. On a GAAP basis, net income surged 60% to $38.5 billion, supported in part by investment-related impacts, while non-GAAP net income climbed 23% to $30.9 billion. Diluted EPS reached $5.16 on a GAAP basis and $4.14 on a non-GAAP basis, both showing robust year-over-year growth.

Cloud performance remained the core growth engine. Microsoft Cloud revenue surpassed $50 billion for the quarter, rising 26% year over year, underscoring strong enterprise and consumer adoption. The Intelligent Cloud segment posted revenue of $32.9 billion, up 29%, with Azure and other cloud services growing 39%, highlighting continued momentum in AI-driven workloads. Productivity and Business Processes revenue increased 16% to $34.1 billion, led by double-digit growth in Microsoft 365 Commercial and Consumer cloud offerings, LinkedIn, and Dynamics 365. More Personal Computing revenue declined slightly to $14.3 billion, reflecting softer Xbox content and services, partially offset by steady Windows OEM and growth in search and news advertising.

CEO Satya Nadella said Microsoft is still in the early stages of AI diffusion, noting that the company has already built an AI business larger than some of its traditional franchises. CFO Amy Hood highlighted that the company exceeded expectations across revenue, operating income, and earnings per share, while returning $12.7 billion to shareholders through dividends and share repurchases during the quarter. Microsoft indicated that forward-looking guidance will be provided during its earnings conference call, as it continues to invest heavily across its AI stack to drive long-term growth.