Microsoft (MSFT) Q2 earnings report 2025

Microsoft shares tumbled as much as 5% in extended trading Wednesday after the software company issued fiscal second-quarter results that included lighter growth in Azure cloud computing services than expected. The company also gave a disappointing quarterly revenue forecast.

Here’s how the company did in comparison with Wall Street expectations, based on a survey of analysts by LSEG:

• Earnings per share: $3.23 vs. $3.11 expected
• Revenue: $69.63 billion vs. $68.78 billion expected

With respect to guidance, Amy Hood, Microsoft’s finance chief, called for $67.7 billion to $68.7 billion in fiscal third-quarter revenue compared with the $69.78 billion consensus from LSEG.

Microsoft’s revenue grew 12.3% year over year in the fiscal second quarter, which ended on Dec. 31, according to a statement. That represents the slowest growth since mid-2023. Net income of $24.11 billion was up from $21.87 billion in the same quarter a year ago.

The company’s Intelligent Cloud segment, which contains the Azure cloud, contributed $25.54 billion in revenue. That was up about 19% but below the $25.83 billion consensus among analysts polled by StreetAccount.

Revenue from Azure and other cloud services jumped 31%, down from 33% in the prior quarter. Microsoft now has a $13 billion annualized revenue run rate for artificial intelligence, CEO Satya Nadella was quoted as saying in the statement.

Of the growth in the fiscal second quarter, 13 percentage points came from artificial intelligence. Microsoft does not disclose Azure revenue in dollars. Analysts polled by CNBC and StreetAccount had been looking for 31.9% and 31.1% growth, respectively.

For the fiscal third quarter, Hood sees 31% to 32% in Azure growth at constant currency, as the company addresses execution challenges and continues to endure capacity constraints. In October, Hood said Azure growth would accelerate in the second half of the fiscal year in comparison with the first half.

Microsoft’s Productivity and Business Processes segment, which includes Office productivity software subscriptions and LinkedIn, posted $29.44 billion in revenue. That was up 13.9% and more than StreetAccount’s $28.89 billion consensus.

The More Personal Computing unit, which includes Windows, Bing, Surface and Xbox, delivered $14.65 billion in revenue. The number was flat year over year and higher than the StreetAccount consensus of $14.29 billion. 

Sales of devices and of Windows operating system licenses from device makers were up 4%. Technology industry researcher Gartner estimated that the PC shipments increased 1.4% in the quarter.

The company reported $15.80 billion in fiscal second-quarter capital expenditures, excluding finance leases. The consensus among analysts polled by Visible Alpha was $15.70 billion.

Microsoft had $2.29 billion…