Microsoft reported a marginal decline in the growth of its cloud-computing unit while the company’s capital expenditure increased about 66% year-on-year.
- The company posted revenue of $81.3 billion, 17% higher than the same period last year and beating street expectations of $80.25 billion.
- Earnings also beat market estimates, with Q2 earnings per share coming in at $4.14, increasing 24% year-on-year.
- Amy Hood, Microsoft’s CFO, said about two-thirds of the company’s capital expense was on short-lived assets, including GPUs and CPUs.
Microsoft Corp. (MSFT) shares slumped over 7% in after-hours trading on Wednesday despite the company reporting second-quarter (Q2) 2026 results that beat Wall Street expectations.
However, the company reported a marginal decline in the growth of its cloud-computing unit, Azure, which clocked a 38% growth in sales for the latest quarter, compared to 39% growth in the same period last year.
The company’s capital expenditure increased about 66% year-on-year, to $37.5 billion.
Q2 Results
The world’s largest software vendor posted revenue of $81.3 billion, 17% higher than $69.63 billion from the same period last year. The latest revenue numbers beat street expectations of $80.25 billion as per data from Fiscal.ai based on 39 analyst estimates.
Earnings also beat market estimates, with Q2 earnings per share coming in at $4.14, increasing 24% year-on-year, and beating analyst estimates of $3.95, as per Fiscal.ai data.
“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,” said Satya Nadella, chairman and CEO of Microsoft in a statement.
“We are pushing the frontier across our entire AI stack to drive new value for our customers and partners,” Nadella added.
Capex Rationale
In an earnings call, Amy Hood, Microsoft’s CFO, said about two-thirds of the company’s $37.5 billion capital expense was on short lived assets, including GPUs and CPUs.
“Our customer demand continues to exceed our supply,” Hood said. “Therefore, we must balance the need to have our incoming supply better meet growing demand with expanding first party AI usage across services like M365, Copilot, and GitHub Copilot, increasing allocations to R&D teams to accelerate product innovation, and continued replacement of end of life server and networking equipment.”
She added that the remaining capex was on long lived assets, expected to support monetization for 15 years and more.
Microsoft expects capex to decrease on a sequential basis on account of normal variability from cloud infrastructure buildouts as well as the timing of delivery of finance leases.
“As we work to close the gap between demand and supply, we expect the mix of short lived assets to remain similar to Q2,” Hood said.
Forward Guidance
Microsoft expects revenue of $80.65 billion to $81.75 billion, or growth of 15 to 17% in the next quarter. The company also said that it expects its Azure revenue growth in the third-quarter to be between 37% and 38% in constant currency.
Microsoft expects operating expenses to increase 10%-11%, driven by research and development investment, AI, compute capacity and talent.
How Did Stocktwits Users React?
On Stocktwits, retail sentiment around MSFT shares was in the ‘extremely bullish’ territory over the past 24 hours amid ‘extremely high’ message volumes.
One bearish user said that the spending required to generate AI revenue was ‘atrocious,’ adding that the value wasn’t visible.
However, another bullish user said the earnings were good, and the company shares would recoup the next day.
Shares of MSFT have risen 7.7% in the past year.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<
Also Read: Meta Shares Surge Over 10% On Strong Q4 Earnings, Higher Superintelligence Spend