MICROSOFT CORP is expected to release its Q2 2026 10-Q filing in the upcoming earnings season. Last quarter: In Q3 FY2026, Microsoft delivered strong 18% revenue growth to $82.9 billion and 23% net income growth to $31.8 billion, propelled by 40% Azure growth and a 99% surge in Commercial Remaining Performance Obligation to $627 billion, even as gross margin declined 1.1 percentage points due to continued AI infrastructure investment.
Drawn from management commentary in the Q1 2026 10-Q:
Microsoft Cloud revenue increased 29% to $54.5 billion in Q3 FY2026, with Azure and other cloud services revenue growing 40% driven by demand across all workloads. Commercial remaining performance obligation increased 99% year-over-year to $627 billion, reflecting a large backlog of future revenue.
Gross margin percentage decreased in Q3 FY2026 driven by continued investments in AI infrastructure and growing AI product usage, partially offset by efficiency gains across Microsoft Cloud. Microsoft Cloud gross margin percentage specifically declined to 66% for the quarter.
Net income and diluted EPS in Q3 FY2026 were negatively impacted by net losses from investments in OpenAI, reducing net income by $14 million, a much smaller impact than the $583 million (or $0.08 per share) drag seen in the prior-year quarter. Over the nine-month period, however, OpenAI investment gains added $4.5 billion to net income and $0.60 to diluted EPS.
Revenue
$82.89B
++18.30% YoY
EPS (Basic)
$4.28
++23.34% YoY
Gross Margin
67.6%
-1.08% YoY
Operating Income
$38.4B
++19.99% YoY
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