Microsoft Q2 FY2026: $81.3B Revenue, Azure AI Grows 39%

Microsoft reported Q2 FY2026 earnings with revenue of $81.3 billion (+17% YoY) and Azure growing 39%, driven by AI services demand.

Key Financial Metrics

AI-Driven Growth

• M365 Copilot: 15M paid seats, 10X DAU growth
• GitHub Copilot: 4.7M subscribers (+75% YoY)
• Microsoft Fabric: $2B+ ARR (+60% YoY)

Infrastructure Investment

• Q2 CapEx: $37.5B
• FY26 Guidance: $120B+
• H1 Actual: $49.3B

CFO Insight on Azure Allocation

“If I had taken the GPUs that came online in Q1 and Q2 and allocated them all to Azure, the KPI would have been over 40%.”

— Amy Hood, CFO

Microsoft is deliberately constraining third-party Azure to feed higher-margin first-party AI products like M365 and GitHub Copilot.

OpenAI Relationship

OpenAI represents approximately 45% of the $625B commercial RPO (~$280B), while the diversified balance grew 28% to ~$345B.

For a deeper strategic analysis, read Microsoft In The AI Stack on The Business Engineer.