This ranking evaluates how Fortune 500 companies are deploying AI, and how technology leaders value those investments relative to industry peers.

Fortune AIQ 75

The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

America's Most Innovative Companies

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

Fortune AIQ 50

The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

These 50 companies exemplify the innovation, progress, and potential of AI.

AI Innovators 2025-Microsoft

Fortune 50 AI Innovators

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are computers, internet services, IT services, semiconductors, and software companies.

Fortune Sector Leaders: Technology

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 200 companies on this list are transforming industries from the inside out.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

WMA 2024-Microsoft

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

WMAC 2023-Microsoft

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

G500-2023-Microsoft

The software, cloud services, and gaming giant has become a trailblazer in artificial intelligence. Meanwhile, its productivity apps and services and other products continue to generate huge profits; Microsoft earned $72.7 billion in 2022, second only to Apple among U.S. Fortune 500 companies. 
<ul> 
 	<li>In January 2023, Microsoft announced that it was making a new $10 billion investment in its longtime partner OpenAI, the creator of ChatGPT. Early products emerging from that partnership include an A.I. assistant to Microsoft 365 apps and services, known as Copilot, and its Bing GPT-4 chatbot.</li> 
 	<li>Even as it announced A.I. advances, Microsoft drew criticism for laying off a team that worked on ensuring ethical outcomes for the technology. Microsoft let the team go as part of a 10,000-employee culling in March 2023. Microsoft said at the time that it was just one of the company’s ethics teams, and that its product teams all had staffers now who “are accountable for ensuring we put our A.I. principles into practice.”</li> 
 	<li>In April 2023, the U.K.’s Competition and Markets Authority blocked Microsoft’s $69 billion acquisition of video-game maker Activision Blizzard, a deal first announced in January 2022. Microsoft has appealed the ruling. The company took a step closer to the merger in July 2023 when a U.S. court ruled against the Federal Trade Commission's efforts to block the deal.</li> 
</ul>

The essential guide to a sector that’s now attracting one out of every four startup investment dollars.

AI-Innovators-2023-Microsoft

While OpenAI deserves the credit for having created ChatGPT, it wouldn't have happened without billions of dollars in investment from Microsoft. The tech giant has committed a reported $13 billion to OpenAI so far and it has built one of the world's largest supercomputing clusters to help OpenAI train its ever-larger, more capable AI models. Microsoft’s Bing Chat, a chatbot and search engine, was built with models from OpenAI, and since its debut, users engaged in over a billion chats with the bot and generated more than a billion images with Bing Image Creator, which uses AI to turn user prompts into images. What Bing hasn't done, however, is move the needle on Microsoft's searh business: Bing remains stuck at about 3% of the global search market, compared to Google's 91%. But for Microsoft, the more important wins from generative AI have been in its Cloud business. Here, Microsoft's ability to offer OpenAI's technology to its Azure cloud customers has helped the tech giant turns in sales and profit growth that has beaten Wall Street expectations, with generative AI accounting for about 3% of the growth in Cloud revenues in the quarter ended in September. Microsoft has also been implementing AI across its core business producitivity software products, from PowerPoint to Outlook, as well as adding products like GitHub Copilot, an AI-powered coding assistant.

The 300 companies on this list are transforming industries from the inside out.

Fortune collaborated with the Diligent Institute to rank the most innovative boards of directors among S&P 500.

Modern Board 2023-Microsoft

After reaching the top spot on last year’s Modern Board 25 ranking, Microsoft has taken a steep tumble but still makes an appearance given its commitment to ESG and board expertise. Its movement on the former includes a push to be carbon negative by 2030, remove historical emissions, and build a “planetary computer” to measure, monitor, and model environmental data. The 12-member board, almost all of whom are independent, includes CEO Satya Nadella, who has been with Microsoft since the early ’90s and previously served as executive vice president of Microsoft’s cloud and enterprise group. Other CEO directors include Wells Fargo’s Charles Scharf, Padmasree Warrior of social reading platform Fable Group, and Emma Walmsley of biopharmaceutical company GSK. In April, The U.K.’s antitrust watchdog vetoed Microsoft’s $69 billion bid to acquire gaming company Activision Blizzard. The company plans to appeal, but a remedy will take time.

Fortune Modern Board 25

The companies on this list are mobilizing the creative tools of capitalism to help solve social problems.

CTW 2023-Microsoft

Only 11% of Indians speak English, the language of the country’s government, while only 57% speak Hindi. That leaves hundreds of millions who speak neither of those languages without good access to information about government services. Microsoft is deploying AI to help: In May, it partnered with local research lab AI4Bharat to create Jugalbandi, a chatbot that combines text-to-speech, translation, and generative AI to give rural Indians access to public services, like university scholarship applications or financial assistance programs, in their own language. The service, which people communicate with through WhatsApp, uses GPT models housed on Microsoft’s Azure OpenAI Service to process questions and uncover information. Jugalbandi is just one way Microsoft hopes to use AI to tackle India’s social issues—and what works in India, with all its complexity, could work globally as well.

Change the World

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500 2023-Microsoft

The software, cloud services, and gaming giant has become a trailblazer in artificial intelligence. Meanwhile, its productivity apps and services and other products continue to generate huge profits; Microsoft earned $72.7 billion in 2022, second only to Apple on the Fortune 500. 
<ul> 
 	<li>In January 2023, Microsoft announced that it was making a new $10 billion investment in its longtime partner OpenAI, the creator of ChatGPT. Early products emerging from that partnership include an A.I. assistant to Microsoft 365 apps and services, known as Copilot, and its Bing GPT-4 chatbot.</li> 
 	<li>Even as it announced A.I. advances, Microsoft drew criticism for laying off a team that worked on ensuring ethical outcomes for the technology. Microsoft let the team go as part of a 10,000-employee culling in March 2023. Microsoft said at the time that it was just one of the company’s ethics teams, and that its product teams all had staffers now who “are accountable for ensuring we put our A.I. principles into practice.”</li> 
 	<li>In April 2023, the U.K.’s Competition and Markets Authority blocked Microsoft’s $69 billion acquisition of video-game maker Activision Blizzard, a deal first announced in January 2022. Microsoft has appealed the ruling.</li> 
</ul>

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

WMAC-2022-03-Microsoft

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

G500 2022-33-Microsoft

Microsoft posted a robust 38% increase in profits last year—earning $61 billion as revenue rose 17.5% to $168 billion. But it wasn’t all smooth sailing. The company’s hardware teams coped with a global chip crisis that led to a shortage of Xbox game consoles, but reveled in successes with the release of new Surface laptops and tablet devices. Its software divisions took some lumps, including a disappointing release of Windows 11 (fewer than 1% of 10 million PCs surveyed by IT firm Lansweeper upgraded to the new system) and an early 2021 cybersecurity attack involving Microsoft’s Exchange email software that affected tens of thousands of customers. On the geopolitical front, Microsoft pulled its LinkedIn social platform from China in October 2021 after facing increased content restrictions from the government. In March 2021, the company unveiled its virtual reality platform Microsoft Mesh; it later won a $22 billion contract to supply U.S. Army combat troops with augmented reality headsets. Microsoft took its place in the stock market record books in June 2021, when it became only the second company in U.S. history, after Apple, to reach a $2 trillion market valuation.

Modern Boards 2022 Microsoft

Microsoft has been one of the top-performing companies in tech (or in any sector) for several years running. It also earns the top spot on our inaugural Modern Board 25, thanks to high marks in gender equality, board independence, board expertise, and ESG. <a href="https://news.microsoft.com/leadership/?section=board-members">Eight of its 12 board members</a> and three out of four committee chairs represent gender or ethnic diversity, which studies have shown correlates with stronger company performance and a greater ability to handle emerging business challenges.  
 
Microsoft’s lead independent director is John W. Thompson, former CEO of Virtual Instruments and Symantec, and one of the most prominent Black executives in tech. After joining the board in 2012, Thompson succeeded Microsoft founder Bill Gates as chairman in 2014 and held that role until 2021. Gates left Microsoft’s board in March 2020.  
 
Reid Hoffman, angel investor and cofounder of LinkedIn, joined the board in 2017 after Microsoft bought his company for $26 billion in 2016. Microsoft’s board also boasts former U.S. secretary of commerce Penny Pritzker, and the former worldwide chairman for Johnson &amp; Johnson, Sandra Peterson. The current CEOs of GlaxoSmithKline, ADP, and Wells Fargo are also directors. Padmasree Warrior, former CTO of Cisco, and two CFOs round out the group, along with CEO Satya Nadella, who was named chairman in 2021. 
 
Some governance experts consider having the CEO serve as board chairman to be suboptimal, but as Thompson explained in a <a href="https://www.cnbc.com/2021/07/07/microsoft-lead-director-ceo-satya-nadella-earned-right-to-be-chair.html">recent interview</a>, Nadella has earned the role of chairman because of the company’s exceptional performance under his watch; since Nadella became CEO in 2014, the company has seen major growth in cloud services and video gaming while remaining dominant in productivity software. Microsoft is one of only a handful of U.S. companies to have exceeded a $1 trillion market capitalization; after briefly dipping below $150 at the beginning of the COVID-19 outbreak in North America, its share price has been over $300 for most of 2022.   
 
Microsoft made headlines in early 2022 with its proposed acquisition of Activision Blizzard, a gaming company embroiled in numerous scandals involving its allegedly toxic work environment. Microsoft’s board and C-suite leaders will face a major challenge as they seek to reshape the acquired company’s culture.

This year’s Fortune 500 marks the 68th running of the list.

F500 2022 Microsoft

Microsoft posted a robust 38% increase in profits last year—earning $61 billion, the fourth-largest sum among Fortune 500 companies—as revenue rose 17.5% to $168 billion. But it wasn’t all smooth sailing. The company’s hardware teams coped with a global chip crisis that led to a shortage of Xbox game consoles, but reveled in successes with the release of new Surface laptops and tablet devices. Its software divisions took some lumps, including a disappointing release of Windows 11 (fewer than 1% of 10 million PCs surveyed by IT firm Lansweeper upgraded to the new system) and an early 2021 cybersecurity attack involving Microsoft’s Exchange email software that affected tens of thousands of customers. On the geopolitical front, Microsoft pulled its LinkedIn social platform from China in October 2021 after facing increased content restrictions from the government. In March 2021, the company unveiled its virtual reality platform Microsoft Mesh; it later won a $22 billion contract to supply U.S. Army combat troops with augmented reality headsets. Microsoft took its place in the stock-market record books in June 2021, when it became only the second company in U.S. history, after Apple, to reach a $2 trillion market valuation.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

WMAC-2021-03-Microsoft

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500-2021-033-Microsoft

While many Big Tech companies faced withering criticism last year for their behavior, Microsoft largely escaped scrutiny. That may be because CEO Satya Nadella has built a collection of complementary parts that perform exceptionally without being the dominant player in any new market. Microsoft’s Azure cloud service, part of the cloud business that increased revenue 34% in the calendar fourth quarter of 2020, trails Amazon. And even as it lags Sony in gaming, Microsoft’s gaming unit saw revenue jump 51% in the holiday quarter with the release of the new Xbox Series X and S. Microsoft still leads its category with the old Windows PC software business, but its PC hardware sales rank outside the top five, and in mobile phones Microsoft is just another app developer. All of this meant that Microsoft was left out of the U.S. House antitrust subcommittee's 450-page report that targeted Apple, Amazon, Facebook, and Google. Sure, there was a complaint in Europe by Slack, alleging that Microsoft had unfairly helped its Teams app. But no one’s seeking to break up the tech giant or undo its acquisitions—at least not for the moment.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-15-Microsoft

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-047-Microsoft

Microsoft jumps 13 spots on this year's Global 500. In the company's fiscal 2019, overall sales soared 14% year-over-year, to $125.8 billion, and the Redmond, Wash., giant churned out $39 billion in profits to boot. Last fall, Microsoft won a coveted cloud-computing contract with the Pentagon worth up to $10 billion, a deal that would help solidify the company's reputation as a leading cloud vendor. (That deal is on hold and under review, however, after rival bidder Amazon raised questions about the bidding process.) So far in 2020, a surge in remote working, as a result of the coronavirus pandemic, has led to even greater demand for the company’s Azure cloud service and its Office 365 workplace apps.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-021-Microsoft

Microsoft reached its highest ranking ever on the Fortune 500, up five spots from last year, and churned out $39 billion in profits to boot. In Microsoft’s fiscal 2019, overall sales soared 14% year-over-year, to $125.8 billion. Last fall, the software titan won a coveted cloud-computing contract with the Pentagon worth up to $10 billion, a deal that would help solidify Microsoft’s reputation as a leading cloud vendor. (That deal is on hold and under review, however, after rival bidder Amazon raised questions about the bidding process.) So far in 2020, a surge in remote working as a result of the coronavirus pandemic has led to even greater demand for the company’s Azure cloud service and its Office 365 workplace apps. Microsoft’s shares hit an all-time high in February at nearly $189, underscoring Wall Street’s enthusiasm for the company's evolution under CEO Satya Nadella.

As we face unprecedented collective challenges, cooperation has become a business superpower.

16.CTW20.Microsoft

Microsoft started off 2020 with a startling announcement: By 2030, the software titan aims to be not just carbon neutral, but carbon negative. By 2050, Microsoft says, it will have negated all of its carbon emissions since its 1975 founding. (Pictured here: Microsoft president Brad Smith, chief financial officer Amy Hood and CEO Satya Nadella on the day of the announcement, Jan. 15, 2020.) 
 
The company is tackling nearer-term crises too. When the world’s focus shifted to the coronavirus, Microsoft responded by offering 25 million people free online training in digital skills such as data analytics, IT, and cybersecurity. It represented a vital lifeline to those whose jobs may never come back—and in particular for women and minorities, who have been hit hardest financially by the pandemic. 
 
That short-term offering is part of a much broader Microsoft upskilling effort. In Africa, for instance, Microsoft’s 4Afrika initiative has established training programs to address the continent’s digital skills gap. It’s a good deed, but it isn’t charity: Microsoft sees Africa as a growth market, and 4Afrika is busy signing up customers and spotting new business ideas.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here’s our look at 57 companies that do well by doing good.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here’s our look at 50 companies that do well by doing good.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Google tops the list once again, marking its eighth appearance and fifth time as No. 1.

Fortune 100 Best Companies to Work For

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Change The World

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Routinely ranked as one of the world’s most valuable companies by market capitalization, the software giant makes the popular Windows PC operating system and the Microsoft 365 suite of business productivity software. It also runs the Microsoft Azure cloud computing service, and owns the Xbox gaming platform, the code repository GitHub, and the professional social network LinkedIn. Cofounded by Bill Gates in 1975, Microsoft operates data centers around the globe to support its cloud computing services. In recent years, Microsoft has been at the forefront of the generative AI revolution through its partnership with OpenAI, its Copilot-branded AI applications, and its own AI models produced in-house.

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Q2 2025

Microsoft (MSFT): Company Profile, Stock Price, News, Rankings

legacy

Microsoft

microsoft

...Greetings, and welcome to the Microsoft Fiscal Year 2026 second quarter earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jonathan Nielsen, Vice President of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us today. On the call with me are Satya Nadella, Chairman and Chief Executive Officer, Amy Hood, Chief Financial Officer, Alice Jolla, Chief Accounting Officer, and Keith Dolliver, Corporate Secretary and Deputy General Counsel. On the Microsoft Investor Relations website, you can find our earnings press release and financial summary slide deck, which is intended to supplement our prepared remarks during today's call and provides the reconciliation of differences between GAAP and non-GAAP financial measures. More detailed outlook slides will be available on the Microsoft Investor Relations website when we provide outlook commentary on today's call. On this call, we will discuss certain non-GAAP items. The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP.

They are included as additional clarifying items to aid investors in further understanding the company's second quarter performance, in addition to the impact these items and events have on the financial results. All growth comparisons we make on the call today relate to the corresponding period of last year, unless otherwise noted. We will also provide growth rates in constant currency when available, as a framework for assessing how our underlying businesses performed, excluding the effect of foreign currency rate fluctuations. Where growth rates are the same in constant currency, we will refer to the growth rate only. We will post our prepared remarks to our website immediately following the call until the complete transcript is available. Today's call is being webcast live and recorded. If you ask a question, it will be included in our live transmission, in the transcript, and in any future use of the recording.

You can replay the call and view the transcript on the Microsoft Investor Relations website. During this call, we will be making forward-looking statements, which are predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ because of factors discussed in today's earnings press release, in the comments made during this conference call, and in the Risk Factors section of our Form 10-K, Forms 10-Q, and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statement. With that, I'll turn the call over to Satya.

Thank you very much, Jonathan. This quarter, the Microsoft Cloud surpassed $50 billion in revenue for the first time, up 26% year-over-year, reflecting the strength of our platform and accelerating demand. We are in the beginning phases of AI diffusion and its broad GDP impact. Our TAM will grow substantially across every layer of the tech stack as this diffusion accelerates and spreads. In fact, even in this early innings, we have built an AI business that is larger than some of our biggest franchises that took decades to build. Today, I'll focus my remarks across the three layers of our stack: cloud and token factory, AI and platform, and high-value agentic experiences. When it comes to our cloud and token factory, the key to long-term competitiveness is shaping our infrastructure to support new high-scale workloads.

We are building this infrastructure out for the heterogeneous and distributed nature of these workloads, ensuring the right fit with the geographic and segment-specific needs for all customers, including the long tail. The key metric we are optimizing for is tokens per watt per dollar, which comes down to increasing utilization and decreasing TCO using silicon systems and software. A good example of this is the 50% increase in throughput we were able to achieve in one of our highest volume workloads, OpenAI inferencing, powering our copilots. Another example was the unlocking of new capabilities and efficiencies for our Fairwater data centers. In this instance, we connected both Atlanta and Wisconsin site through an AI WAN to build a first-of-its-kind AI super factory. Fairwater's two-story design and liquid cooling allow us to run higher GPU densities and thereby improve both performance and latencies for high-scale training.

All up, we added nearly 1 GW of total capacity this quarter alone. At the silicon layer, we have NVIDIA and AMD and our own Maia chips, delivering the best all-up fleet performance, cost, and supply across multiple generations of hardware. Earlier this week, we brought online our Maia 200 accelerator. Maia 200 delivers 10+ petaflops at FP4 precision with over 30% improved TCO compared to the latest generation hardware in our fleet. We will be scaling this, starting with inferencing and synthetic data gen for our super intelligence team, as well as doing inferencing for Copilot and Foundry. And given AI workloads are not just about AI accelerators, but also consume large amounts of compute, we are pleased with the progress we are making on the CPU side as well.

Cobalt 200 is another big leap forward, delivering over 50% higher performance compared to our first custom-built processor for cloud-native workloads. Sovereignty is increasingly top of mind for customers, and we are expanding our solutions and global footprint to match. We announced DC investments in seven countries this quarter alone, supporting local data residency needs. We offer the most comprehensive set of sovereignty solutions across public, private, and national partner clouds, so customers can choose the right approach for each workload with the local control they require. Next, I want to talk about the agent platform. Like in every platform shift, all software is being rewritten. A new app platform is being born.

You can think of agents as the new apps, and to build, deploy, and manage agents, customers will need a model catalog, tuning services, harness for orchestration, services for context engineering, AI safety, management, observability, and security. It starts with having broad model choice. Our customers expect to use multiple models as part of any workload that they can fine-tune and optimize based on cost, latency, and performance requirements. We offer the broadest selection of models of any hyperscaler. This quarter, we added support for GPT-5 too, as well as Claude 4.5. Already, over 1,500 customers have used both Anthropic and OpenAI models on Foundry. We are seeing increasing demand for region-specific models, including Mistral and Cohere, as more customers look for sovereign AI choices.

We continue to invest in our first-party models, which are optimized to address the highest value customer scenarios, such as productivity, coding, and security. As part of Foundry, we also give customers the ability to customize and fine-tune models. Increasingly, customers want to be able to capture the tacit knowledge they possess inside of model weights as their core IP. This is probably the most important sovereign consideration for firms as AI diffuses more broadly across our GDP, and every firm needs to protect their enterprise value. For agents to be effective, they need to be grounded in enterprise data and knowledge. That means connecting their agents to systems of record and operational data, analytical data, as well as semi-structured and unstructured productivity and communications data. And this is what we are doing with our Unified IQ layer, spanning Fabric, Foundry, and data powering Microsoft 365.

In the world of context engineering, Foundry Knowledge and Fabric are gaining momentum. Foundry Knowledge delivers better context with automated source routing and advanced agentic retrieval while respecting user permissions. Fabric brings together end-to-end operational, real-time, and analytical data. Two years since it became broadly available, Fabric's annual revenue run rate is now over $2 billion, with over 31,000 customers, and it continues to be the fastest-growing analytics platform on the market, with revenue up 60% year-over-year. All up, the number of customers spending $1 million plus per quarter on Foundry grew nearly 80%, driven by strong growth in every industry. Over 250 customers are on track to process over 1 trillion tokens on Foundry this year. There are many great examples of customers using all of this capability on Foundry to build their own agentic systems.

Alaska Airlines is creating natural language flight search, BMW is speeding up design cycles, Land O'Lakes is enabling precision farming for co-op members, and SymphonyAI is addressing bottlenecks in the CPG industry. And of course, Foundry remains a powerful on-ramp for the entire cloud. The vast majority of Foundry customers use additional Azure solutions like developer services, app services, databases as they scale. Beyond Fabric and Foundry, we are also addressing agent building by knowledge workers with Copilot Studio and Agent Builder. Over 80% of the Fortune 500 have active agents built using these low-code, no-code tools. As agents proliferate, every customer will need new ways to deploy, manage, and protect them. We believe this creates a major new category and significant growth opportunity for us.

This quarter, we introduced Agent 365, which makes it easy for organizations to extend their existing governance, identity, security, and management to agents. That means the same controls they already use across Microsoft 365 and Azure now extend to agents they build and deploy on our cloud or any other cloud. And partners like Adobe, Databricks, Genspark, Glean, NVIDIA, SAP, ServiceNow, and Workday are already integrating Agent 365. We are the first provider to offer this type of agent control plane across clouds. Now, let's turn to the high-value agentic experiences we are building. AI experiences are intent-driven and are beginning to work at task scope. We are entering an age of macro delegation and micro steering across domains. Intelligence using multiple models is built into multiple form factors.

You see this in chat, in new agent inbox apps, coworker scaffoldings, agent workflows embedded in applications and IDEs that are used every day, or even in our command line with file system access and skills. That's the approach we are taking with our first-party family of Copilot spanning key domains. In consumer, for example, Copilot experiences span chat, news, feed, search, creation, browsing, shopping, and integrations into the operating system, and it's gaining momentum. Daily users of our Copilot app increased nearly 3x year-over-year, and with Copilot Checkout, we have partnered with PayPal, Shopify, and Stripe so customers can make purchases directly within the app.... With Microsoft 365 Copilot, we are focused on organization-wide productivity. Work IQ takes the data underneath Microsoft 365 and creates the most valuable stateful agent for every organization.

It delivers powerful reasoning capabilities over people, their roles, their artifacts, their communications, and their history and memory, all within an organization's security boundary. Microsoft 365 Copilot's accuracy and latency, powered by Work IQ, is unmatched, delivering faster and more accurate work-grounded results than competition. We have seen our biggest quarter-over-quarter improvement in response quality to date. This has driven record usage intensity, with average number of conversations per user doubling year-over-year. Microsoft 365 Copilot also is becoming true daily habit, with daily active users increasing 10x year-over-year. We are also seeing strong momentum with Researcher Agent, which supports both OpenAI and Claude, as well as agent mode in Excel, PowerPoint, and Word. All up, it was a record quarter for Microsoft 365 Copilot seat adds, up over 160% year-over-year.

We saw accelerating seat growth quarter-over-quarter, and now have 15 million paid Microsoft 365 Copilot seats and multiples more enterprise chat users. We are seeing larger commercial deployments. The number of customers with over 35,000 seats tripled year-over-year. Fiserv, ING, NASA, University of Kentucky, University of Manchester, US Department of Interior, and Westpac all purchased over 35,000 seats. Publicis alone purchased over 95,000 seats for nearly all its employees. We are also taking share in Dynamics 365 with built-in agents across the entire suite. A great example of this is how Visa is turning customer conversations data into knowledge articles with our Customer Knowledge Management Agent in Dynamics, and how Sandvik is using our Sales Qualification Agent to automate lead qualification across tens and thousands of potential customers. In coding, we are seeing strong growth across all paid GitHub Copilot.

Copilot Pro plus subs for individual devs increased 77% quarter-over-quarter, and all up now, we have 4.7 million paid Copilot subscribers, up 75% year-over-year. Siemens, for example, is going all in on GitHub, adopting the full platform to increase developer productivity after a successful Copilot rollout to 30,000+ developers. GitHub Agent HQ is the organizing layer for all coding agents like Anthropic, OpenAI, Google, Cognition, and xAI in the context of customers' GitHub repos. With Copilot CLI and VS Code, we offer developers the full spectrum of form factors and models they need for AI-first coding workflows. And when you add Work IQ as a skill or an MCP to our developer workflow, it's a game changer, surfacing more context like emails, meetings, docs, projects, messages, and more.

You can simply ask the agent to plan and execute changes to your code base based on an update to a spec in SharePoint or using the transcript of your last engineering and design meeting in Teams. We are going beyond that with GitHub Copilot SDK. Developers can now embed the same runtime behind Copilot CLI, multi-model, multi-step planning tools, MCP integration, auth, streaming directly into their applications. In security, we added a dozen new and updated Security Copilot agents across Defender, Entra, Intune, and Purview. For example, Icertis's SOC team used Security Copilot agent to reduce manual triage time by 75%, which is a real game changer in an industry facing a severe talent shortage.

To make it easier for security teams to onboard, we are rolling out Security Copilot to all our E5 customers, and our security solutions are also becoming essential to manage organizations' AI deployments. 24 billion Copilot interactions were audited by Purview this quarter, up 9x year-over-year. Finally, I want to talk about two additional high-impact agentic experiences. First, in healthcare, Dragon Copilot is the leader in its category, helping over 100,000 medical providers automate their workflows. Mount Sinai Health is now moving to a system-wide Dragon Copilot deployment for providers after a successful trial with its primary care physicians. All up, we helped document 21 million patient encounters this quarter, up 3x year-over-year. And second, when it comes to science and engineering, companies like Unilever in consumer goods and Synopsys in EDA are using Microsoft Discovery to orchestrate specialized agents for R&D end-to-end.

They're able to reason over scientific literature and internal knowledge, formulate hypotheses, spin up simulations, and continuously iterate to drive new discoveries. Beyond AI, we continue to invest in all our core franchises and meet the needs of our customers and partners, and we are seeing strong progress. For example, when it comes to cloud migrations, our new SQL Server has over 2x the IaaS adoption of the previous version. In security, we now have 1.6 million security customers, including over 1 million who use four or more of our workloads. Windows reached a big milestone, 1 billion Windows 11 users, up over 45% year-over-year. We had share gains this quarter across Windows, Edge, and Bing.

Double-digit member growth in LinkedIn with 30% growth in paid video ads. In gaming, we are committed to delivering great games across Xbox, PC, Cloud, and every other device, and we saw record PC players and paid streaming hours on Xbox. In closing, we feel very good about how we are delivering for customers today and building the full stack to capture the opportunity ahead. With that, let me turn it over to Amy to walk through our financial results and outlook, and I look forward to rejoining for your questions.

Thank you, Satya, and good afternoon, everyone. With growing demand for our offerings and focused execution by our sales teams, we again exceeded expectations across revenue, operating income, and earnings per share while investing to fuel long-term growth. This quarter, revenue was $81.3 billion, up 17% and 15% in constant currency. Gross margin dollars increased 16% and 14% in constant currency, while operating income increased 21% and 19% in constant currency. Earnings per share was $4.14, an increase of 24% and 21% in constant currency when adjusted for the impact from our investment in OpenAI. FX increased reported results slightly less than expected, particularly in Intelligent Cloud revenue.

Company gross margin percentage was 68%, down slightly year-over-year, primarily driven by continued investments in AI infrastructure and growing AI product usage that was partially offset by ongoing efficiency gains, particularly in Azure and M365 Commercial Cloud, as well as sales mix shift to higher margin businesses. Operating expenses increased 5% and 4% in constant currency, driven by R&D investments in compute capacity and AI talent, as well as impairment charges in our gaming business. Operating margins increased year-over-year to 47% ahead of expectations. As a reminder, we still account for our investment in OpenAI under the equity method, and as a result of OpenAI's recapitalization, we now record gains or losses based on our share of the change in their net assets on their balance sheet, as opposed to our share of their operating profit or losses from their income statement.

Therefore, we recorded a gain which drove other income and expense to $10 billion in our GAAP results. When adjusted for the OpenAI impact, other income and expense was slightly negative and lower than expected, driven by net losses on investments. Capital expenditures were $37.5 billion, and this quarter, roughly two-thirds of our CapEx was on short-lived assets, primarily GPUs and CPUs. Our customer demand continues to exceed our supply. Therefore, we must balance the need to have our incoming supply better meet growing Azure demand with expanding first-party AI usage across services like M365 Copilot and GitHub Copilot, increasing allocations to R&D teams to accelerate product innovation, and continued replacement of end-of-life server and networking equipment. The remaining spend was for long-lived assets that will support monetization for the next 15 years and beyond.

This quarter, total finance leases were $6.7 billion and were primarily for large data center sites, and cash paid for PP&E was $29.9 billion. Cash flow from operations was $35.8 billion, up 60%, driven by strong cloud billings and collections. Free cash flow was $5.9 billion and decreased sequentially, reflecting the higher cash capital expenditures from a lower mix of finance leases. Finally, we returned $12.7 billion to shareholders through dividend and share repurchases, an increase of 32% year-over-year. Now to our commercial results.

Commercial bookings increased 230% and 228% in constant currency, driven by the previously announced large Azure commitment from OpenAI that reflects multiyear demand needs, as well as the previously announced Anthropic commitment from November and healthy growth across our core annuity sales motions. Commercial remaining performance obligation, which continues to be reported net of reserves, increased to $625 billion and was up 110% year-over-year, with a weighted average duration of approximately 2.5 years. Roughly 25% will be recognized in revenue in the next twelve months, up 39% year-over-year. The remaining portion, recognized beyond the next twelve months, increased 156%. Approximately 45% of our commercial RPO balance is from OpenAI.

The significant remaining balance grew 28% and reflects ongoing broad customer demand across the portfolio. Microsoft Cloud revenue was $51.5 billion and grew 26% and 24% in constant currency. Microsoft Cloud gross margin percentage was slightly better than expected at 67% and down year over year due to continued investments in AI that were partially offset by ongoing efficiency gains noted earlier. Now to our segment results. Revenue from Productivity and Business Processes was $34.1 billion and grew 16% and 14% in constant currency. M365 Commercial Cloud revenue increased 17% and 14% in constant currency, with consistent execution in the core business and increasing contribution from strong Copilot results.

ARPU growth was again led by E5 and M365 Copilot, and paid M365 commercial seats grew 6% year-over-year to over 450 million, with installed base expansion across all customer segments, though primarily in our small and medium business and frontline worker offerings. M365 Commercial Products revenue increased 13% and 10% in constant currency ahead of expectations due to higher-than-expected Office 2024 transactional purchasing. M365 Consumer Cloud revenue increased 29% and 27% in constant currency, again driven by ARPU growth…. M365 consumer subscriptions grew 6%. LinkedIn revenue increased 11% and 10% in constant currency, driven by marketing solutions. Dynamics 365 revenue increased 19% and 17% in constant currency, with continued growth across all workloads.

Segment gross margin dollars increased 17% and 15% in constant currency, and gross margin percentage increased, again, driven by efficiency gains at M365 Commercial Cloud that were partially offset by continued investments in AI, including the impact of growing Copilot usage. Operating expenses increased 6% and 5% in constant currency, and operating income increased 22% and 19% in constant currency. Operating margins increased year-over-year to 60%, driven by improved operating leverage, as well as the higher gross margins noted earlier. Next, the Intelligent Cloud segment. Revenue was $32.9 billion and grew 29% and 28% in constant currency.

In Azure and other cloud services, revenue grew 39% and 38% in constant currency, slightly ahead of expectations, with ongoing efficiency gains across our fungible fleet, enabling us to reallocate some capacity to Azure that was monetized in the quarter. As mentioned earlier, we continued to see strong demand across workloads, customer segments, and geographic regions, and demand continues to exceed available supply. In our on-premises server business, revenue increased 2% and 1% in constant currency, ahead of expectations, driven by demand for our hybrid solutions, including a benefit from the launch of SQL Server 2025, as well as higher transactional purchasing ahead of memory price increases. Segment gross margin dollars increased 20% and 19% in constant currency. Gross margin percentage decreased year-over-year, driven by continued investments in AI and sales mix shift to Azure, partially offset by efficiency gains in Azure.

Operating expenses increased 3% and 2% in constant currency, and operating income grew 28% and 27% in constant currency. Operating margins were 42%, down slightly year-over-year, as increased investments in AI were mostly offset by improved operating leverage. Now to More Personal Computing. Revenue was $14.3 billion and declined 3%. Windows OEM and devices revenue increased 1% and was relatively unchanged in constant currency. Windows OEM grew 5% with strong execution, as well as a continued benefit from Windows 10 end of support. Results were ahead of expectations as inventory levels remained elevated, with increased purchasing ahead of memory price increases. Search and news advertising revenue, ex TAC, increased 10% and 9% in constant currency, slightly below expectations, driven by some execution challenges. As expected, the sequential growth rate moderated as the benefit from third-party partnerships normalized.

In gaming, revenue decreased 9% and 10% in constant currency. Xbox content and services revenue decreased 5% and 6% in constant currency and was below expectations, driven by first-party content with impact across the platform. Segment gross margin dollars increased 2% and 1% in constant currency, and gross margin percentage increased year-over-year, driven by sales mix shift to higher margin businesses. Operating expenses increased 6% and 5% in constant currency, driven by the impairment charges in our gaming business noted earlier, as well as R&D investments in compute capacity and AI talent. Operating income decreased 3% and 4% in constant currency, and operating margins were relatively unchanged year-over-year at 27%, as higher operating expenses were mostly offset by higher gross margins. Now, moving to our Q3 outlook, which, unless specifically noted otherwise, is on a US dollar basis.

Based on current rates, we expect FX to increase total revenue growth by three points. Within the segments, we expect FX to increase revenue growth by four points in Productivity and Business Processes and two points in Intelligent Cloud and More Personal Computing. We expect FX to increase COGS and operating expense growth by two points. As a reminder, this impact is due to the exchange rates a year ago. Starting with the total company, we expect revenue of $80.65 billion-$81.75 billion, or growth of 15%-17%, with continued strong growth across our commercial businesses, partially offset by our consumer businesses.

We expect COGS of $26.65 billion-$26.85 billion, or growth of 22%-23%, and operating expense of $17.8 billion-$17.9 billion, or growth of 10%-11%, driven by continued investment in R&D, AI compute capacity, and talent against a low prior year comparable. Operating margins should be down slightly year-over-year. Excluding any impact from our investments in OpenAI, other income and expense is expected to be roughly $700 million, driven by a fair market gain in our equity portfolio and interest income, partially offset by interest expense, which includes the interest payments related to data center finance leases. We expect our adjusted Q3 effective tax rate to be approximately 19%.

Next, we expect capital expenditures to decrease on a sequential basis due to the normal variability from cloud infrastructure build-outs and the timing of delivery of finance leases. As we work to close the gap between demand and supply, we expect the mix of short-lived assets to remain similar to Q2. Now, our commercial business. In commercial bookings, we expect healthy growth in the core business on a growing ex-pre base when adjusted for the OpenAI contracts in the prior year. As a reminder, the significant OpenAI contract signed in Q2 represents multiyear demand needs from them, which will result in some quarterly volatility in both bookings and RPO growth rates going forward. Microsoft Cloud gross margin percentage should be roughly 65%, down year-over-year, driven by continued investments in AI. Now to segment guidance.

In Productivity and Business Processes, we expect revenue of $34.25 billion-$34.55 billion, or growth of 14%-15%. In M365 Commercial Cloud, we expect revenue growth to be between 13%-14% in constant currency, with continued stability in year-over-year growth rates on a large and expanding base. Accelerating Copilot momentum and ongoing E5 adoption will again drive ARPU growth. M365 Commercial Products revenue should decline in the low single digits, down sequentially, assuming Office 2024 transactional purchasing trends normalize. As a reminder, M365 Commercial Products include components that can be variable due to in-period revenue recognition dynamics. M365 consumer cloud revenue growth should be in the mid- to high-20% range, driven by growth at ARPU, as well as continued subscription volume.

For LinkedIn, we expect revenue growth to be in the low double digits, and in Dynamics 365, we expect revenue growth to be in the high teens, with continued growth across all workloads. For Intelligent Cloud, we expect revenue of $34.1 billion-$34.4 billion, or growth of 27%-29%. In Azure, we expect Q3 revenue growth to be between 37% and 38% in constant currency against a prior year comparable that included significantly accelerating growth rates in both Q3 and Q4. As mentioned earlier, demand continues to exceed supply, and we will need to continue to balance the incoming supply we can allocate here against other priorities.

As a reminder, there can be quarterly variability in year-on-year growth rates depending on the timing of capacity delivery and when it comes online, as well as from in-period revenue recognition, depending on the mix of contracts. In our on-premises server business, we expect revenue to decline in the low single digits as growth rates normalize following the launch of SQL Server 2025. Though increased memory pricing could create additional volatility in transactional purchasing. In More Personal Computing, we expect revenue to be $12.3 billion-$12.8 billion. Windows OEM and devices revenue should decline in the low teens. Growth rates will be impacted as the benefit from Windows 10 end of support normalizes and as elevated inventory levels come down through the quarter. Therefore, Windows OEM revenue should decline roughly 10%.

The range of potential outcomes remains wider than normal, in part due to the potential impact on the PC market from increased memory pricing. Search and news advertising ex-TAC revenue growth should be in the high single digits. Even as we work to improve execution, we expect continued share gains across Bing and Edge, with growth driven by volume, and we expect sequential growth moderation as the contribution from third-party partnerships continues to normalize. And in Xbox content and services, we expect revenue to decline in the mid single digits against a prior year comparable that benefited from strong content performance, partially offset by growth in Xbox Game Pass, and hardware revenue should decline year-over-year. Now, some additional thoughts on the rest of the fiscal year and beyond. First, FX.

Based on current rates, we expect FX to increase Q4 total revenue and COGS growth by less than 1 point, with no impact to operating expense growth. Within the segments, we expect FX to increase revenue growth by roughly 1 point in Productivity and Business Processes and More Personal Computing and less than 1 point in Intelligent Cloud. With the strong work delivered in H1 to prioritize investment in key growth areas and the favorable impact from a higher mix of revenue in our Windows OEM and commercial on-prem businesses, we now expect FY 2026 operating margins to be up slightly. We mentioned the potential impact on Windows OEM and on-premises server markets from increased memory pricing earlier. In addition, rising memory prices would impact capital expenditures, though the impact on Microsoft Cloud gross margins will build more gradually as these assets depreciate over six years.

In closing, we delivered strong top-line growth in H1 and are investing across every layer of the stack to continue to deliver high-value solutions and tools to our customers. With that, let's go to Q&A. Jonathan?

Thanks, Amy. We'll now move over to Q&A. Out of respect for others on the call, we request that participants please only ask one question. Operator, can you please repeat your instructions?

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Keith Weiss with Morgan Stanley. Please proceed.

Excellent. Thank you, guys, for taking the question. I'm looking at a Microsoft print where earnings is growing 24% year-on-year, which is a spectacular result. Great execution on your part. Top line growing well, margins expanding. But I'm looking at after-hours trading, and the stock is still down. And I think one of the core issues that is weighing on investors is CapEx is growing faster than we expected, and maybe Azure is growing a little bit slower than we expected. And I think that fundamentally comes down to a concern on the ROI on this CapEx spend over time. So I was hoping you guys could help us fill in some of the blanks a little bit in terms of how should we think about capacity expansion and what that can yield in terms of Azure growth going forward?

More to the point, how should we think about the ROI on this investment as it comes to fruition? Thanks, guys.

... Thanks, Keith. And let me start, and Satya can add some broader comments, I'm sure. I think the first thing, I think you really asked a very direct correlation that I do think many investors are doing, which is between the CapEx spend and seeing an Azure revenue number. And, you know, we tried last quarter, and I think again this quarter, to talk more specifically about all the places that the CapEx spend, especially the short-lived CapEx spend across CPU and GPU, and where that'll show up. Sometimes I think it's probably better to think about the Azure guidance that we give as an allocated capacity guide about what we can deliver in Azure revenue. Because as we spend the capital and put GPUs specifically, it applies to CPUs, but GPUs more specifically, we're really making long-term decisions.

The first thing we're doing is solving for the increased usage in sales and the accelerating pace of M365 Copilot, as well as GitHub Copilot, our first-party apps. Then we make sure we're investing in the long-term nature of R&D and product innovation. And much of the acceleration that I think you've seen from us in products over the past bit is coming because we are allocating GPUs and capacity to many of the talented AI people we've been hiring over the past years. You end up with the remainder going towards serving the Azure capacity that continues to grow in terms of demand.

A way to think about it, because I think I get asked this question sometimes, is, you know, if I had taken the GPUs that just came online in Q1 and Q2, in terms of GPUs, and allocated them all to Azure, the KPI would have been over 40. And I think the most important thing to realize is that this is about investing in all the layers of the stack that benefit customers, and I think that's hopefully helpful in terms of thinking about capital growth. It shows in every piece. It shows in revenue growth across the business and shows as OpEx growth as we invest in our people.

Yeah, I think you, Amy, covered it. But basically, as an investor, I think when you think about our capital, and you think about the GM profile of our portfolio, you should obviously think about Azure, but you should think about M365 Copilot, and you should think about GitHub Copilot. You should think about Dragon Copilot, Security Copilot. All of those have a GM profile and lifetime value. I mean, if you think about it, acquiring an Azure customer is super important to us, but so is acquiring an M365 or a GitHub or a Dragon Copilot, which are all, by the way, incremental businesses and TAMs for us. And so we don't want to maximize just one business of ours.

We want to be able to allocate capacity while we're sort of supply constrained in a way that allows us to essentially build the best LTV portfolio. That's on one side, and the other one that Amy mentioned is also R&D. I mean, you got to think about compute is also R&D, and that's sort of the second element of it. And so we're using all of that, obviously, to optimize for the long term.

Thanks, Keith. Operator, next question, please.

The next question comes from the line of Mark Moerdler with Bernstein Research. Please proceed.

Thank you very much for taking my question, and congrats on the quarter. One of the other questions we believe investors want to understand is how to think about your line of sight from hardware CapEx investment to revenue and margins. You capitalize servers over six years, but the average duration of your RPO is 2.5 years, up from two years last quarter. How do investors get comfortable that since this is a lot of this CapEx is AI-centric, that you'll be able to capture sufficient revenue over the 6-year useful life of the hardware to deliver solid revenue and gross profit dollars growth? Hopefully, one similar to the CPU revenue. Thank you.

Thanks, Mark. Let me start with at a high level, and Satya can add as well. I think, you know, when you think about average duration, I think what you're getting to is, and we need to remember, is that average duration is a combination of a broad set of contract arrangements that we have. A lot of them around things like M365 or our BizApp portfolio are shorter dated, right? Three-year contracts, and so they have, quite frankly, a short duration. The majority then, that's remaining are Azure contracts that are longer duration, and you saw that this quarter when we saw the extension of that duration from around 2 years to 2.5.

The way to think about that is, you know, the majority of the capital that we're spending today, and a lot of the GPUs that we're buying, are already contracted for most of their useful life. So a way to think about that is, you know, much of that risk that I think you're pointing to isn't there because they're already sold for the entirety of their useful life. So part of it exists because you have this shorter dated RPO because of some of the M365 stuff. If you look at the Azure-only RPO, it's a little bit more extended. A lot of that is CPU basis. It's not just GPU.

On the GPU contracts that we've talked about, including for some of our largest customers, those are sold for the entire useful life of the GPU, and so there's not the risk to which I think you may be referring. Hopefully, that's helpful.

... Yeah, and just one other thing I would add, to it is, in addition to sort of what Amy mentioned, which is it's already contracted for the useful life, is we do use software to continuously run even the latest models on, the fleet, that is aging, if you will. So that's sort of what gives us that duration. And so, at the end of the day, we want to have— That's why we even think about aging the fleet constantly, right? So it's not about buying a whole lot of gear one year. It's about each year you ride the Moore's Law, you add, you use software, and then you optimize across all of it.

And Mark, maybe to state this, in case it's not obvious, is that as you go through the useful life, actually, you get more and more and more efficient at its delivery. So where you've sold the entirety of its life, the margins actually improve with time. And so I think that may be a good reminder to people as we see that, obviously, in the CPU fleet all the time.

Microsoft (MSFT) Q2 2026 Earnings Call Transcript

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