Chairman and CEO of Microsoft Satya Nadella delivers a speech during the World Economic Forum (WEF) Annual Meeting in Davos, Switzerland on January 20, 2026.
Microsoft shares fell 7% in extended trading on Wednesday after the software maker posted slowing cloud growth.
Here's how the company performed in comparison with LSEG consensus:
Earnings per share: $4.14 adjusted vs. $3.97 expected
$4.14 adjusted vs. $3.97 expected Revenue: $81.27 billion vs. $80.27 billion expected
With respect to guidance, Microsoft called for $80.65 billion to $81.75 billion in fiscal third-quarter revenue. The middle of the range was $81.2 billion, meeting the LSEG consensus of $81.19 billion. The company's forecast for quarterly Azure cloud growth was 37% to 38% at constant currency. The StreetAccount consensus was 37.1%.
The company's implied fiscal third-quarter operating margin is 45.1%, below StreetAccount's 45.5% consensus. Operating expenses will include investments in artificial intelligence computing capacity and talent.
For the fiscal second quarter, which ended on Dec. 31, Microsoft's revenue grew 16.7% year over year, according to a statement. Net income, at $38.46 billion, or $5.16 per share, was up from $24.11 billion, or $3.23 per share, in the same quarter a year earlier. Adjusted earnings exclude impact from investments in OpenAI. The company's gross margin was the narrowest it's been in three years, coming in just over 68%.
Revenue from Azure and other cloud services grew 39%, compared with 40% growth in the fiscal first quarter. Analysts surveyed by StreetAccount and CNBC had expected 39.4% and 38.9% growth, respectively.
The company reported $9.97 billion in other income, compared with other expense of $2.29 billion in the same quarter a year ago. The swing comes three months after OpenAI announced a restructuring that involved its for-profit arm becoming a public-benefit corporation. Microsoft saw a decrease in its proportionate ownership of OpenAI, yielding a dilution gain.
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