In a major earnings report released on Wednesday, January 28, 2026, Microsoft revealed a massive $7.6 billion after-tax gain (approximately $10 billion pre-tax) directly tied to its investment in OpenAI.
This accounting windfall—a result of OpenAI’s October 2025 recapitalization—boosted Microsoft’s GAAP net income to $38.5 billion for the quarter, marking a 60% year-on-year jump.
1. The Financial Breakdown: GAAP vs. Non-GAAP
While the $7.6 billion gain looks impressive on paper, Microsoft encouraged investors to focus on its “adjusted” (non-GAAP) figures to see the underlying health of the business.
| Financial Metric | Q2 FY2025 (Last Year) | Q2 FY2026 (Current) | Change (YoY) |
| Total Revenue | $69.6 Billion | $81.3 Billion | ↑ 17% |
| Net Income (GAAP) | $24.1 Billion | $38.5 Billion | ↑ 60% |
| Net Income (Adjusted) | $25.0 Billion | $30.9 Billion | ↑ 23% |
| EPS (Adjusted) | $3.35 | $4.14 | ↑ 24% |
2. The OpenAI “Backlog” & Commercial Commitments
The most telling figure in the report was the Commercial Remaining Performance Obligation (RPO), which represents contracted future revenue.
- The $625 Billion Pile: Microsoft’s backlog surged 110% year-over-year.
- The OpenAI Factor: Roughly 45% (~$281 billion) of this future revenue is linked to OpenAI’s long-term commitment to purchase Azure cloud capacity.
- Anthropic Growth: The RPO was also bolstered by a new $30 billion cloud deal with rival lab Anthropic, signaling that Microsoft is successfully diversifying its AI hosting revenue.
3. The Cost of Leadership: $37.5 Billion in Capex
Despite the record profits, Microsoft’s stock initially slid 5–7% after-hours due to the staggering cost of maintaining its AI advantage.
- GPU Build-out: Capital expenditures jumped 66% to $37.5 billion in a single quarter.
- The Supply Gap: CEO Satya Nadella noted that “demand for cloud services continues to exceed available supply,” leading the company to add 1 gigawatt of capacity this quarter alone.
- Custom Silicon: To lower costs, Microsoft brought its Maia 200 AI accelerator online, claiming a 30% improvement in total cost of ownership (TCO) compared to off-the-shelf hardware.
4. Azure and Copilot Momentum
Azure remains the primary engine of growth, though investors are now scrutinizing even the slightest decelerations.
- Azure Growth: Revenue from Azure and other cloud services grew 39%, beating management’s guidance of 37%.
- Copilot Adoption: For the first time, Microsoft disclosed that Microsoft 365 Copilot has reached 15 million paid seats, with daily users increasing nearly 3x year-over-year.
- Foundry Success: Over 1,500 customers are now using both Anthropic and OpenAI models on Microsoft’s “Foundry” platform.
Conclusion: A “Show Me the Money” Moment
The $7.6 billion gain underscores the massive valuation surge of OpenAI, but it also highlights Microsoft’s growing dependence on its partner. With nearly half of its future cloud backlog tied to a single startup and capex reaching historic highs, 2026 is becoming the year where Microsoft must prove that its “AI super factory” can generate durable, long-term margins.
