Stock Markets January 28, 2026

Microsoft Q2 Results Beat Estimates but Cloud Growth Only Marginally Tops Forecasts

Strong overall profits and revenue contrast with muted investor reaction after Azure growth closely aligned with expectations

By Nina Shah MSFT
Microsoft Q2 Results Beat Estimates but Cloud Growth Only Marginally Tops Forecasts
MSFT

Microsoft reported second-quarter results that surpassed analyst forecasts for earnings and revenue, yet shares slid in after-hours trading after Azure cloud growth barely exceeded market estimates. The company posted robust operating and net income gains, and highlighted the expanding role of AI in its business, while preparing to offer further guidance on its conference call.

Key Points

  • Microsoft beat estimates with adjusted EPS of $4.14 and revenue of $81.3 billion, up 17% year over year.
  • Azure cloud revenue grew 39%, marginally above the analyst expectation of 38.8%, which led to an approximate 4% drop in after-hours share price.
  • Operating income rose 21% to $38.3 billion; GAAP net income increased 60% to $38.5 billion, and non-GAAP net income rose 23% to $30.9 billion. Sectors impacted include technology and cloud services.

Microsoft reported second-quarter results that outperformed analyst estimates on both the bottom line and top line, but investors reacted negatively after-hours when Azure cloud growth came in only marginally above forecasts.

Adjusted earnings per share were $4.14, beating the analyst estimate of $3.93. Revenue for the quarter reached $81.3 billion, above the consensus figure of $80.23 billion and up 17% from the year-ago period.

Despite the overall beat, Microsoft shares declined about 4% in after-hours trading after the company disclosed that Azure cloud revenue rose 39% year over year - a pace that narrowly exceeded analyst expectations of 38.8% rather than significantly surpassing them. Microsoft will provide guidance on its earnings conference call.

The company said Microsoft Cloud revenue topped $50 billion for the quarter, underscoring the continued strength of its cloud business. Operating income climbed 21% to $38.3 billion compared with the same quarter a year earlier.

On profitability, Microsoft reported GAAP net income of $38.5 billion, a 60% increase year over year. Non-GAAP net income rose 23% to $30.9 billion. The company noted that its non-GAAP results exclude the impact from investments in OpenAI.

Commenting on the role of artificial intelligence within the company, Satya Nadella, chairman and chief executive officer of Microsoft, said: "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."

The mixed market reaction reflects investor focus on the trajectory of cloud growth even as overall financial metrics improved. Microsoft’s scheduled earnings conference call will be the vehicle for management to provide updated guidance and additional context about forward expectations.


Summary: Microsoft delivered a quarterly earnings and revenue beat with adjusted EPS of $4.14 and revenue of $81.3 billion, while Azure revenue growth of 39% only narrowly topped analyst expectations of 38.8%, prompting a roughly 4% drop in after-hours trading. The company reported strong operating and net income gains and will discuss guidance on its conference call.

Risks

  • Investor disappointment tied to cloud growth pacing could pressure technology and cloud services stocks.
  • Uncertainty around forward guidance - Microsoft will provide guidance on its earnings conference call, which could influence market reaction for tech and enterprise software sectors.
  • Non-GAAP results exclude investments in OpenAI, which may affect comparisons and investor interpretation of underlying profitability in the technology sector.

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