Microsoft’s massive monetary guess on synthetic intelligence bought even larger within the December quarter, however it additionally confirmed continued indicators of paying off for its cloud enterprise.
The corporate spent $37.5 billion on capital expenditures in the course of the second quarter of its 2026 fiscal yr, up 66% from a yr in the past, with roughly two-thirds going towards GPUs and different {hardware} to energy its AI and cloud choices, in keeping with outcomes launched Thursday afternoon.
Income rose 17% to $81.3 billion, topping the $80.3 billion analyst consensus, and adjusted earnings per share jumped 24% to $4.14, nicely forward of the $3.85 anticipated by Wall Avenue.
Azure, Microsoft’s cloud computing platform, which is more and more pushed by AI demand, posted income progress of 39% within the quarter, or 38% in fixed foreign money. That exceeded the corporate’s earlier steering of 37% progress.
The broader Microsoft Cloud enterprise, which additionally consists of business Microsoft 365 subscriptions, LinkedIn, and Dynamics 365, topped $50 billion in quarterly income for the primary time.
The outcomes include an accounting quirk tied to Microsoft’s OpenAI funding. Beneath typically accepted accounting rules, Microsoft recorded a $10 billion acquire this quarter stemming from OpenAI’s October recapitalization. That boosted Microsoft’s GAAP earnings per share to $5.16, translating right into a 60% leap that doesn’t actually mirror its underlying enterprise.
Microsoft’s adjusted earnings ($4.14/share) strip out the OpenAI influence for readability. On the flip aspect, the corporate expects to document accounting losses in future quarters as OpenAI spends down its money.
In the meantime, the corporate’s remaining efficiency obligations (RPO), a intently watched measure of contracted future income, greater than doubled to $625 billion. OpenAI accounts for roughly 45% of that backlog, reflecting the AI firm’s long-term commitments to make use of Microsoft’s Azure cloud infrastructure underneath their renegotiated partnership.
The remainder of Microsoft’s RPO steadiness grew 28%, which the corporate mentioned was aided by a dedication from Anthropic, one other main AI firm that has turn out to be an Azure buyer.
Microsoft shares have been down 4% in preliminary after-hours buying and selling.
