Microsoft's cloud business has surpassed a significant milestone, reaching over $50 billion in quarterly revenue for the first time, reflecting the growing impact of artificial intelligence on its services. For the second quarter of its 2026 fiscal year, the tech giant reported a 39% increase in revenue for Azure, which outpaced earlier growth expectations.
In financial results released on Wednesday, Microsoft disclosed a 17% rise in overall revenue to $81.3 billion, exceeding analyst predictions of $80.3 billion. The adjusted earnings per share rose 24% to $4.14, significantly higher than the anticipated $3.85.
Driving these results was a substantial investment of $37.5 billion in capital expenditures, an increase of 66% year-over-year, primarily focused on GPUs and hardware for AI and cloud services. Moreover, the quarter saw a net income jump to $38.5 billion, bolstered by a $7.6 billion after-tax gain linked to OpenAI's recapitalization.
Additionally, Microsoft 365 Copilot has achieved 15 million paid seats, marking a significant indicator of enterprise AI adoption. However, future quarters may see accounting losses as OpenAI utilizes its funds.