Microsoft pulled in $81.3 billion in revenue for its second fiscal quarter ending December 31, 2025, a 17% rise compared to the same period last year.
The company beat revenue estimates by $1 billion and earnings estimates by nearly 20 cents per share. Still, none of that stopped its stock from slipping 3% after hours on Wednesday.
Why? Slower growth in cloud was enough to cool investor excitement, even with every other number flashing green.
Microsoft’s earnings per share landed at $4.14 on an adjusted basis, compared to the expected $3.97. On a GAAP basis, it was even higher at $5.16. Net income jumped 60% to $38.5 billion under GAAP. On a non-GAAP basis, it reached $30.9 billion, up 23%.
The change in earnings presentation had a big role in that. In 2024, investments in OpenAI reduced Microsoft’s bottom line. But in this latest quarter, that same stake added $7.6 billion in value. That reversal helped push profit numbers higher across the board.
AI revenue grows as OpenAI boosts cloud pipeline
Satya Nadella, Microsoft’s CEO, said, “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.”
That came as Microsoft confirmed its cloud revenue crossed $50 billion, up 26% from last year. Amy Hood, the company’s CFO, said, “We exceeded expectations across revenue, operating income, and earnings per share.”
Microsoft’s commercial remaining performance obligation, future contracted revenue not yet recorded, hit $625 billion, more than double last year’s level. That massive jump came after OpenAI committed $250 billion to Microsoft’s cloud services. OpenAI alone now accounts for 45% of that $625 billion.
Azure and other cloud services revenue grew 39%. That matched analyst forecasts but slightly missed the 40% growth seen in the previous quarter. Intelligent Cloud, the segment that includes Azure, pulled in $32.9 billion, up 29%.
Microsoft also highlighted its Productivity and Business Processes segment, which brought in $34.1 billion, up 16%. Within that, Microsoft 365 Commercial cloud revenue climbed 17%, Microsoft 365 Consumer shot up 29%, LinkedIn rose 11%, and Dynamics 365 was up 19%.
Not everything was sunshine. Microsoft’s More Personal Computing division brought in $14.3 billion, down 3%. Xbox content and services revenue fell 5%, and even with a tiny 1% increase in Windows OEM and device sales, the overall category dragged.
On the plus side for investors, Microsoft returned $12.7 billion to shareholders through dividends and share buybacks in the quarter. That’s a 32% increase over the same quarter last year.
Here’s the detailed financial table showing how Microsoft’s OpenAI investment impacted GAAP and non-GAAP figures:
- GAAP net income (2025): $38.5 billion
- Adjusted net income (2025): $30.9 billion
- GAAP EPS (2025): $5.16
- Adjusted EPS (2025): $4.14
- GAAP net income (2024): $24.1 billion
- Adjusted net income (2024): $25.0 billion
- GAAP EPS (2024): $3.23
- Adjusted EPS (2024): $3.35
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Source: https://www.cryptopolitan.com/microsoft-q2-revenue-rises-17-to-81-3b/
