Microsoft Cloud surpasses $50 billion milestone amid global AI surge; Profits up in Q2 26
Microsoft achieves record growth as AI demand propels quarterly revenue to $81.3 billion and its cloud division to an unprecedented $50 billion milestone.
- Jan 29, 2026,
- Updated Jan 29, 2026 1:10 PM IST
Microsoft Corporation has reported a significant jump in profits for the second quarter of its 2026 fiscal year, largely driven by the rapid adoption of artificial intelligence and a record-breaking performance in its cloud division.
The company announced that revenue for the quarter ending 31 December 2025 reached $81.3 billion, a 17% increase compared to the same period last year.
Net income also saw a rise, climbing 60% to $38.5 billion.
The standout performer was the Microsoft Cloud division, which surpassed $50 billion in quarterly revenue for the first time, rising to $51.5 billion in FY26 Q2, from $40.9 billion in FY25 Q2.
Chief Executive Satya Nadella described the results as the "beginning phases of AI diffusion," noting that the company is successfully turning its massive investments in artificial intelligence into tangible business value.
Azure, Microsoft’s flagship cloud platform, grew by 39% as businesses increasingly shift their workloads to the cloud to take advantage of new AI tools.
Capital expenditure reached $37.5 billion this quarter (up 66%). According to Microsoft, roughly two-thirds of that money went towards CPUs and GPUs for data centres that are needed to power the next generation of AI.
While the "Intelligent Cloud" and "Productivity" sectors soared, the "More Personal Computing" segment, which includes Xbox and Windows, including Xbox and content services, saw a 5% dip in revenue.
Xbox hardware revenue declined 32%.
However, with Windows 11 now used by over one billion people, the company maintains a massive global footprint.
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Microsoft Corporation has reported a significant jump in profits for the second quarter of its 2026 fiscal year, largely driven by the rapid adoption of artificial intelligence and a record-breaking performance in its cloud division.
The company announced that revenue for the quarter ending 31 December 2025 reached $81.3 billion, a 17% increase compared to the same period last year.
Net income also saw a rise, climbing 60% to $38.5 billion.
The standout performer was the Microsoft Cloud division, which surpassed $50 billion in quarterly revenue for the first time, rising to $51.5 billion in FY26 Q2, from $40.9 billion in FY25 Q2.
Chief Executive Satya Nadella described the results as the "beginning phases of AI diffusion," noting that the company is successfully turning its massive investments in artificial intelligence into tangible business value.
Azure, Microsoft’s flagship cloud platform, grew by 39% as businesses increasingly shift their workloads to the cloud to take advantage of new AI tools.
Capital expenditure reached $37.5 billion this quarter (up 66%). According to Microsoft, roughly two-thirds of that money went towards CPUs and GPUs for data centres that are needed to power the next generation of AI.
While the "Intelligent Cloud" and "Productivity" sectors soared, the "More Personal Computing" segment, which includes Xbox and Windows, including Xbox and content services, saw a 5% dip in revenue.
Xbox hardware revenue declined 32%.
However, with Windows 11 now used by over one billion people, the company maintains a massive global footprint.
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