Microsoft says it grew faster across revenue, profit, and earnings in its fiscal second quarter, the three months ending December 31, 2025. The company reported $81.3 billion in revenue, up 17% year over year, powered by Microsoft Cloud and another quarter of strong Azure growth.
Microsoft also highlighted the expanding role of AI across its product stack. CEO Satya Nadella said the company has already built an AI business “larger than some of our biggest franchises,” while CFO Amy Hood pointed to Microsoft Cloud revenue crossing $50 billion for the quarter.
Figures you should know
Microsoft’s headline results for the quarter ended December 31, 2025:
- Revenue: $81.3 billion, up 17% year over year (15% in constant currency)
- Operating income: $38.3 billion, up 21% (19% in constant currency)
- Net income (GAAP): $38.5 billion, up 60%
- Diluted EPS (GAAP): $5.16, up 60%
- Net income (non GAAP): $30.9 billion, up 23%
- Diluted EPS (non GAAP): $4.14, up 24%
One detail matters if you track the jump in GAAP profit. Microsoft’s release says non GAAP results exclude the impact from investments in OpenAI, and the reconciliation table shows OpenAI investment effects flowing through net income and earnings per share. In this quarter, that impact boosted GAAP results versus the adjusted figures.
Microsoft also returned $12.7 billion to shareholders through dividends and share repurchases during the quarter, a year over year increase the company pegged at 32%.
Cloud leads the quarter, Azure stays hot
Microsoft said Microsoft Cloud revenue reached $51.5 billion, up 26% year over year (24% in constant currency). That is a large piece of the overall $81.3 billion quarter.
Inside cloud, Azure remained the headline growth engine:
- Azure and other cloud services: up 39% year over year (38% in constant currency)
Microsoft also pointed to longer term contracted demand. It said commercial remaining performance obligation rose 110% to $625 billion, which you can read as a snapshot of future revenue under contract that has not yet been recognized.
Segment breakdown: where growth came from and where it did not
Microsoft split results into three segments. Here is what the company reported, in plain terms.
Productivity and Business Processes: $34.1 billion, up 16%
This segment includes Microsoft 365, LinkedIn, and Dynamics.
- Microsoft 365 Commercial cloud revenue: up 17% (14% constant currency)
- Microsoft 365 Consumer cloud revenue: up 29% (27% constant currency)
- LinkedIn revenue: up 11% (10% constant currency)
- Dynamics 365 revenue: up 19% (17% constant currency)
Intelligent Cloud: $32.9 billion, up 29%
This includes Azure and server products, and it stayed the fastest growing segment.
- Azure and other cloud services revenue: up 39% (38% constant currency)
More Personal Computing: $14.3 billion, down 3%
This segment includes Windows, devices, gaming, and search advertising.
- Windows OEM and Devices revenue: up 1% (flat in constant currency)
- Xbox content and services revenue: down 5% (down 6% constant currency)
- Search and news advertising excluding traffic acquisition costs: up 10% (up 9% constant currency)
The mix tells you something simple. Microsoft’s growth still concentrates in cloud, enterprise software, and subscriptions. Consumer and device linked areas looked steadier, and gaming softened year over year.
GAAP vs non GAAP: why the gap matters this quarter
You saw GAAP net income jump 60%. You also saw non GAAP net income rise 23%. That difference is the point.
Microsoft’s release says its quarter’s GAAP results include the impact from investments in OpenAI, while non GAAP excludes it to help you compare operating performance across periods. In the reconciliation table, the OpenAI line swings net income and EPS between GAAP and adjusted results.
If you track Microsoft quarter to quarter, you should watch both:
- GAAP: what Microsoft reported under accounting rules, including investment gains or losses
- Non GAAP: what Microsoft reported after removing the OpenAI investment impact, to show operating trends in the core business
What’s next
Microsoft said it will share forward looking guidance on its earnings call and webcast tied to the quarterly release. That is where you should look for management’s view on Azure growth, cloud margins, AI capacity spending, and demand signals across the rest of fiscal 2026.
Investors also kept one theme front and center on earnings day: Microsoft’s AI investment pace and how quickly those costs convert into durable revenue.
