Microsoft’s Cloud Revenue Surpasses $50B Despite Stock Dip Amid Growth Concerns
Microsoft recently announced its Q2 fiscal 2026 earnings on January 28, surpassing Wall Street’s projections. The tech giant reported a revenue of $81.3 billion, marking a 17% increase, and its cloud revenue exceeded $50 billion for the first time, reaching $51.5 billion. Despite these impressive figures, the company’s stock experienced a 7% drop as investors expressed concerns over the slowing growth of the cloud sector and slim profit margins.
The growth of Azure cloud services was reported at 39%, a slight decrease from the previous quarter’s 40%, narrowly missing the anticipated 39.4% by analysts. The company’s gross margin was the lowest it has been in three years, slightly above 68%, indicative of the massive investments made in AI infrastructure.
“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,” stated CEO Satya Nadella. The company disclosed for the first time that it now has 15 million seats for Microsoft 365 Copilot, its AI productivity add-on.
Microsoft’s revenue guidance for the third quarter, ranging from $80.65 to $81.75 billion, met expectations. However, its implied operating margin of 45.1% fell slightly short of the 45.5% consensus. The reported results included a $7.6 billion net gain from investments in OpenAI, underscoring the dynamic nature of their partnership.
Source: Microsoft Q2 2026 Earnings Report