Microsoft performs slightly better than expected, but investors worry about AI returns
Microsoft exceeded expectations for revenue from its cloud business in the second fiscal quarter of 2026, but that was not enough to assuage investor concerns.
In the October-December period, Azure cloud division revenue grew 39%, slightly more than the 38.8% forecast, while total revenue rose 17% to $81.3 billion – just above the analyst estimate of around $80.3 billion.
But investors reacted negatively: Microsoft shares fell more than 7% after the stock market closed. This came as concerns remain about the return on Microsoft’s huge investments in artificial intelligence (AI).
Although Microsoft has an early lead in the AI race – thanks in part to its partnership with OpenAI – the company faces intense competition from other players such as Google, Anthropic and Amazon.
Analysts also point out that Microsoft could incur costs from losses at OpenAI, in which it has a 27% stake. And despite a deal under which OpenAI buys billions worth of Azure services, OpenAI is now allowed to use other cloud providers, reducing its reliance on Microsoft.
Total revenue rose 17 per cent to $81.3 billion in the second quarter, compared with analysts’ expectations of $80.27 billion.
The productivity & business processes division achieved sales of $34.1 billion, a growth of 16%. Within this branch, Microsoft 365 Commercial revenue increased by 17%, while Microsoft 365 Consumer showed even 29% growth. LinkedIn sales increased by 11% and Dynamics 365 grew by 19%.
Sales in Intelligent Cloud were $32.9 billion, up 29%. The core engine within this division remains Azure.
The more personal computing division recorded revenues of $14.3 billion, down 3%. Revenue from Windows OEM and Devices rose slightly by 1%, while revenue from Xbox content and services fell by 5%. In contrast, ad revenue from search and news, excluding traffic costs, rose 10%.
Emerce
Subscribers 0
Fans 0
Followers 0
Followers