Microsoft’s AI Bet is Finally Paying Off—But Investors Are Still Freaking Out

Microsoft just dropped its Q2 2026 earnings, and the numbers are, frankly, wild. The headline? A massive $7.6 billion gain thanks to its favorite child, OpenAI.

For the first time, Microsoft’s cloud business—now essentially an AI delivery mechanism—reached $50 billion in a single quarter. Overall revenue hit $81.3 billion, up 17% year-over-year, but it’s the OpenAI connection that’s doing the heavy lifting. 

Thanks to an accounting quirk following OpenAI's recent restructuring into a for-profit public benefit corporation, Microsoft recorded a massive one-time paper gain, boosting its net income to a staggering $38.5 billion.

But because this is the 2026 AI economy, good news is never just good news. Despite the billions, Microsoft’s stock took a tumble in after-hours trading. The problem is that the price of staying in the lead is getting eye-wateringly expensive. Capital expenditure jumped 66 percent to $37.5 billion this quarter; Satya Nadella is essentially spending $400 million a day on GPUs and data centers to keep the engines humming.

The company is also sitting on a $625 billion backlog of "remaining performance obligations"—basically a mountain of IOUs for future services. Nearly 45 percent of that is tied directly to OpenAI. While Microsoft finally shared some real-world adoption numbers, claiming 15 million paid seats for its 365 Copilot, Wall Street remains fixated on the burn rate.

Microsoft is winning the AI race, but it’s spending money so fast it might set the track on fire. Satya Nadella is betting the entire house that "AI diffusion" will eventually justify the $37 billion-a-quarter hardware bill, even if the market isn't quite ready to exhale yet.