Microsoft has opened 2026 with a landmark quarter that firmly positions them as the global leader in enterprise cloud and AI adoption.
In the earning report, Microsoft has achieved milestones with cloud revenue surpassing $50 billion for the first time, record growth in Copilot usage, and major acceleration in commercial bookings, this earnings report signals a new era for Microsoft’s growth and might put the AI Bubble Burst chats to bed?
Top standouts were:
- Cloud revenue surpased $50B for first time, up 26% to $51.5B
- Microsoft 365 Copilot seats up 160% with 15 million paid seats
- Commercial bookings up 230%
- Productivity & Business Processes up 16%
- Intelligent Cloud grew 29%
Cloud Revenue Surges 26% to $51.5B
Microsoft Cloud revenue reached $51.5 billion, up 26% year‑on‑year – its strongest performance to date.
This is a pivotal number for analysts and CIOs alike, reinforcing Microsoft’s dominance as enterprises scale AI workloads, hybrid cloud infrastructures, and GPU‑accelerated services.
Supporting this momentum, their Intelligent Cloud revenue grew 29%, reaching $32.9 billion.
This remains Microsoft’s fastest‑growing segment, driven largely by Azure and AI services.
Microsoft AI: Copilot Growth Explodes
If 2024–25 marked AI experimentation, Q2 FY26 confirms enterprise AI at scale. Microsoft Q2 results were.
- Microsoft 365 Copilot seats up 160% year‑on‑year, now at 15 million paid seats
- GitHub Copilot subscribers up 75%
This data supports Microsoft narrative that more organisations are moving from pilot phases to widespread (well wider) deployment. These Copilot adoption rates are among the strongest indicators Microsoft has ever reported for a Copilot. They have previously avoided too much focus on the actual Copilot seats sold.
15 million paid Copilot seats (users) is a lot of seats… Let that sink in a moment!
Another interesting state was “the number of customers spending one million dollars-plus per quarter on Foundry grew nearly 80%, driven by strong growth in every industry….. over 250 customers are on track to process over one trillion tokens on Foundry this year. “
Long term AI Growth is strong
Q2 FY26 demonstrates that Microsoft has completed its transition from a cloud‑first business to an AI‑first hyperscaler, with every major metric — revenue, bookings, cash flow, and product adoption — propelled by AI demand.
Microsoft said the majority growth of their Azure Cloud was fuelled by AI Cloud Infrastructure and area Microsoft continue to invest. This is also reflected in the GitHub Copilot and Microsoft 365 Copilot growth.
Microsoft FY26 Q2 message shows that reinforces AI isn’t the future of Microsoft’s business it’s the present, and the the future and it’s scaling fast.
You can read the earning report transcript here.