Microsoft reported its second quarter 2026 earnings and it showed that its search and advertising revenue was up for 10% but growth is down over the past two quarters. The previous quarter it was up 16% and the one before that was 21% and this quarter, it is only up 10%.
Microsoft wrote, "Search and news advertising revenue excluding traffic acquisition costs increased 10% (up 9% in constant currency)."
Microsoft reports Q2 revenue up 17% YoY to $81.3B, operating income up 21% to $38.3B, net income up 60% to $38.5B, and Microsoft Cloud revenue up 26% to $51.5B.
Here is the chart I make showing just the ad dollar change from quarter to quarter, so you can see just that:
Here are the highlights from the earnings release:
- Revenue was $81.3 billion and increased 17% (up 15% in constant currency)
- Operating income was $38.3 billion and increased 21% (up 19% in constant currency)
- Net income on a GAAP basis was $38.5 billion and increased 60%, and on a non-GAAP basis was $30.9 billion and increased 23% (up 21% in constant currency)
- Diluted earnings per share on a GAAP basis was $5.16 and increased 60%, and on a non-GAAP basis was $4.14 and increased 24% (up 21% in constant currency)
- Non-GAAP results exclude the impact from investments in OpenAI, explained in the Non-GAAP Definition section below
Satya Nadella, Microsoft's CEO, said:
“We are only at the beginning phases of AI diffusion and already Microsoft has built an AI business that is larger than some of our biggest franchises," said Satya Nadella, chairman and chief executive officer of Microsoft. “We are pushing the frontier across our entire AI stack to drive new value for our customers and partners.”
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