Microsoft's AI investments weigh on profitability, amid heated competition and massive capital requirements.

Microsoft's fiscal Q2 results show a 17% YoY revenue increase to $81.3 billion and a 24% YoY non-GAAP EPS rise to $4.14. However, the company's massive investments in AI are pressuring margins, with a gross margin narrowing to 68% YoY. The commercial backlog grew 110% to $625 billion, but 45% of this is tied to OpenAI, a single partner. The company guided for its operating margin to be down YoY in Q3.