Microsoft’s profit grew by 23% thanks to Azure and OpenAI, confirming the effectiveness of its artificial‑intelligence strategy.

Microsoft Reports Q2 2026 Results

Key Highlights

1. Revenue and Profit Growth
Microsoft generated $81.3 bn in revenue from software sales and services, up 17 % year‑over‑year. Net income rose to $30.9 bn, a 23 % increase.

2. PC Supply Chain Issues
At the end of last year there was an unexpected surge in PC sales despite a memory‑chip shortage. The end of Windows 10 support played a role, but the main driver was manufacturers’ efforts to build up inventory amid fears of new tariffs and further shortages.

3. OEM Windows Licences
Revenue from OEM licences grew only 1 % YoY. However, sales of licences sold exclusively with PCs (pure OEM) increased by 5 %. The decline in the device segment offset overall growth, as Microsoft now consolidates device and licence data.

4. Windows 11 Users
In the most recent quarter Windows 11 reached one million users – a 45 % YoY increase. The end of Windows 10 support accelerated the transition, allowing Windows 11 to quickly overtake its predecessor.

5. Xbox Segment
- Revenue from Xbox hardware fell 32 % versus the same period last year – third consecutive year.
- Total revenue for the gaming division declined by 9 %.
- Profit from content and services (Game Pass, subscriptions) dropped 5 %, largely due to weak sales of *Call of Duty: Black Ops 7* and stronger results in the prior year.

6. Cloud Services
Microsoft Cloud revenue surpassed $50 bn for the first time, up 26 % YoY. Overall Azure and related service revenues grew 39 %. CFO Amy Hood noted that revenue, operating income, and EPS all beat expectations.

7. Artificial Intelligence
Analysts continue to monitor growth in AI‑related revenues and associated costs. The report highlights ongoing integration of AI into cloud services, but specific figures have not yet been disclosed.

Takeaway

Microsoft shows steady revenue and profit expansion, though the Xbox segment remains under pressure and PC supply chain challenges persist. Successes with Windows 11 and cloud offerings remain key growth drivers, while AI initiatives stay a priority for investors.