Microsoft delivered strong financial results for the quarter ended 31 December, driven by accelerating demand for artificial intelligence (AI) and cloud services, with revenue rising 17% to $81.3 billion.
The software giant’s operating income climbed 21% to $38.3 billion, while net income on a generally accepted accounting principles (GAAP) basis surged 60% to $38.5 billion. On a non-GAAP basis, net income increased 23% to $30.9 billion.
Diluted earnings per share rose 60% to $5.16 on a GAAP basis and 24% to $4.14 on a non-GAAP basis. Non-GAAP results exclude the impact of Microsoft’s investments in OpenAI.
Over the years, Microsoft has made multibillion-dollar investments in ChatGPT maker OpenAI, positioning itself at the centre of the global AI race. The partnership integrates OpenAI’s advanced models into Microsoft products, such as Azure, Microsoft 365 and Copilot, strengthening the company’s cloud and productivity offerings.
“We are only at the beginningphases of AI diffusion and already Microsoft has built an AI business that islarger than some of our biggest franchises,” says Satya Nadella, chairman andchief executive officer of Microsoft. “We are pushing the frontier across our entire AI stack to drive new value for our customers and partners.”
Microsoft Cloud revenue exceeded $50 billion in the quarter, underscoring the central role of cloud services in the company’s growth strategy.
“Microsoft Cloud revenue crossed $50 billion this quarter, reflecting the strong demand for our portfolio of services,” says Amy Hood, executive vice-president and chief financial officer of Microsoft. “We exceeded expectations across revenue, operating income and earnings per share.”
Microsoft Cloud revenue reached $51.5 billion, up 26%, while commercial remaining performance obligation increased 110% to $625 billion.
Revenue in the productivity and business processes segment rose 16% to $34.1 billion, supported by growth in Microsoft 365, LinkedIn and Dynamics 365.
Intelligent Cloud revenue increased 29% to $32.9 billion, with Azure and other cloud services revenue up 39%.
In contrast, revenue in the ‘more personal computing’ segment declined 3% to $14.3 billion, reflecting weaker performance in Xbox content and services, although search and news advertising revenue increased 10%.
Microsoft returned $12.7 billion to shareholders through dividends and share repurchases in the second quarter of fiscal 2026, up 32% from the same period a year earlier.
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