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Microsoft Posts Strong Quarter as AI Demand Outruns Azure Capacity

Massive AI-focused spending alongside a sizable OpenAI-linked backlog is sharpening questions about near-term returns.

Overview

  • Microsoft reported Q2 fiscal 2026 revenue of $81.3 billion and EPS of $4.14, with net income up 60% year over year.
  • Remaining performance obligations reached about $625 billion, with some reports indicating a large portion is tied to OpenAI, highlighting concentration risk.
  • Capital expenditures totaled roughly $37.5 billion, much of it for GPUs and CPUs, and the company added about one gigawatt of data-center capacity while supply still trails demand.
  • Management guided next-quarter revenue to approximately $80.65–$81.75 billion and projected Azure growth of about 37%–38%.
  • AI offerings continued to scale, including 15 million paid Microsoft 365 Copilot seats and 4.7 million GitHub Copilot paid subscribers.