Microsoft Corp. reported higher revenue and profit for the second quarter of fiscal year 2026, which is attributed mainly to the continued demand for its cloud services and growing use of artificial intelligence (AI) across its products.
For the quarter ended Dec. 31, 2025, Microsoft posted revenue of $81.3 billion, up 17% from the same period a year earlier. Operating income grew by 21% to $38.3 billion. Net income on a GAAP basis climbed 60% to $38.5 billion, while non-GAAP net income increased 23% to $30.9 billion. Diluted earnings per share reached $5.16 on a GAAP basis and $4.14 on a non-GAAP basis. Non-GAAP figures exclude the impact of Microsoft’s investments in OpenAI.
“We are only at the beginning phases of AI diffusion and already Microsoft has built an AI business that is larger than some of our biggest franchises,” said Satya Nadella, chair and CEO of Microsoft. “We are pushing the frontier across our entire AI stack to drive new value for our customers and partners.”
Microsoft Cloud revenue reached $51.5 billion during the quarter, an increase of 26%, marking the first time it crossed the $50 billion level. The company said commercial remaining performance obligations more than doubled to $625 billion, reflecting long-term customer contracts.
The Productivity and Business Processes segment generated $34.1 billion in revenue, up 16%. Microsoft 365 Commercial cloud revenue grew 17%, while Microsoft 365 Consumer cloud revenue increased 29%. LinkedIn revenue grew 11%, and Dynamics 365 revenue increased 19%.
Revenue from the Intelligent Cloud segment reached $32.9 billion, up 29%. Within this unit, Azure and other cloud services recorded a 39% increase in revenue.
More Personal Computing revenue declined 3% to $14.3 billion. Windows OEM and Devices revenue increased slightly by 1%, while Xbox content and services revenue fell 5%. Search and news advertising revenue, excluding traffic acquisition costs, increased 10%.
During the quarter, Microsoft returned $12.7 billion to shareholders through dividends and share repurchases, up 32% year on year.