Microsoft Shares Slide Despite Strong Cloud Growth. Is It Time to Buy the Dip?

The stock terms of Microsoft (NASDAQ: MSFT) sank contempt the tech elephantine reporting beardown quarterly results for its fiscal 2026 2nd quarter. The driblet appears to beryllium mostly attributed to higher operating disbursal guidance and its dependence connected OpenAI. The banal is present down somewhat implicit the past year, arsenic of this writing.

Let's excavation into the company's study and prospects to spot if this dip is simply a buying opportunity.

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Microsoft's unreality computing unit, Azure, erstwhile again was its biggest maturation operator successful the quarter, with gross soaring 39% (38% successful changeless currencies). It was the 10th consecutive 4th that Azure gross climbed by 30% oregon more, arsenic request for compute powerfulness and artificial quality (AI) services continues to thrust results. Commercial bookings, which should beryllium a harbinger of aboriginal revenue, soared 230%, led by ample commitments from OpenAI and Anthropic.

Microsoft's full gross roseate by 17% twelvemonth implicit twelvemonth to $81.3 billion, with adjusted net per stock (EPS) climbing 24% to $4.14. The results topped the expert statement for $80.3 cardinal successful gross and $3.97 successful EPS, arsenic compiled by LSEG.

Overall "intelligent cloud" revenue, which includes Azure, accrued by 29% twelvemonth implicit twelvemonth to $32.9 billion. Its productivity and concern processes segment, wherever Microsoft 365 and LinkedIn sit, saw gross emergence 16% twelvemonth implicit twelvemonth to $34.1 billion. Growth was beardown crossed its 4 main solutions successful the conception (in the table), led by a 29% leap successful Microsoft 365 Consumer unreality revenue, helped by an earlier terms summation and 6% subscriber growth.

Data source: Microsoft property release. YOY = Year implicit year.

Revenue successful its "more idiosyncratic computing" segment, which is location to Windows and Xbox, fell by 3% twelvemonth implicit twelvemonth to $14.3 billion. Its hunt and quality advertizing business, which is besides portion of the segment, led the mode with gross rising 10%. Windows OEM and instrumentality revenue, meanwhile, grew by 1%, portion Xbox gross slipped 5%.

Looking ahead, the institution forecast fiscal 2026 Q3 gross of betwixt $80.65 cardinal to $81.75 billion, portion analysts were looking for gross of $81.19 billion. It projected Azure gross would ascent by betwixt 37% and 38% successful changeless currencies.