Microsoft’s AI gold rush continues while hardware business cools

Microsoft’s AI revenue surged 175% year-over-year to a $13 billion annual run rate, while its gaming hardware business saw significant declines, according to the company’s Q2 2025 earnings report released Tuesday. The tech giant reported overall revenue of $69.6 billion, up 12% from the previous year, with net income rising 10% to $24.1 billion.

CEO Satya Nadella highlighted the company’s expanding artificial intelligence business during the earnings call, emphasizing Microsoft’s focus on helping customers “unlock the full ROI of AI.”