Jason Luongo
Growth-Stock Options Trader, LEAPS & Income Strategies
Microsoft is down about 24% in 2026 almost entirely on AI capex fear while its fundamentals keep strengthening. Q3 revenue rose 18% to $82.9B, Azure grew 40%, its fastest in over a year, the AI business reached a $37B run rate, up 123%, and commercial backlog hit $627B, up 99%. Its forward P/E has compressed to about 22x versus a 10-year average near 31x. The capex fear is real: free cash flow fell about 10% and the $190B AI buildout will not pay off overnight. x.comÂ
Microsoft is spending $190B in capex through 2026 because demand for AI compute still outstrips supply, and its AI business is scaling fast. Q3 revenue rose 18% to $82.9B, Azure grew 40% with 39-40% guided for next quarter, and AI annualized revenue reached $37B, up 123%. Copilot has over 20M paid seats across Office, GitHub and enterprise workflows, and EPS of $4.27 beat estimates by 5%. x.comÂ
Microsoft's AI spending is producing faster growth with better economics: Azure accelerated to 48% on a $100B+ base while capex was $39.4B, below expectations. Management then guided Azure to 49-50% and said demand still exceeds supply, ending the debate over whether AI investment is paying off. Overweight, $625 target. x.com x.com x.comÂ
Microsoft's salesforce and governed platform unlock AI spending at conservative firms. Faster enterprise than consumer AI adoption makes it effectively the only pure play. M365 Commercial may top 20% growth next quarter, sooner than expected on tonight's guide; GitHub resegmentation helps, but it should do so this year anyway. Azure and M365, two-thirds of revenue, should grow above 50% and 20% and may accelerate. $24-25 CY27 EPS remains achievable, implying under 22x forward earnings. x.com … Show more
Microsoft is a great business but still an expensive bet at $385, because heavy AI capex is eroding free cash flow. Capex was revised to $190B for the year, $43B above expectations, and free cash flow fell to $15.8B. Revenue grew 18% to $82.9B, operating income 20%, Azure 40% and AI run rate reached $37B, with a 47% operating margin. The average analyst target of $560 implies 45% upside only if the AI spending converts on schedule. x.comÂ
Microsoft's 50% Azure growth and prospect of positive cash flow in 2027 make the stock look bulletproof. Headcount cuts, lower Anthropic spend, a better Copilot routed to cheaper tokens, and coming proprietary chips and model usage add to the case. It should get Apple's multiple plus recognition for cybersecurity. x.com x.comÂ
Azure's accelerating growth and better returns per capex dollar leave further upside on the table for Microsoft, the favored hyperscaler. Azure grew 48% versus 44-45% guidance, its fifth straight beat. The stock is holding eight-week EMA support, with the blue candle still intact. x.comÂ
Microsoft's insatiable-demand story now hinges on OpenAI growing revenue into commitments it may not be able to fund. OpenAI's compute commitments have risen to $750B through 2030 from $600B, including $250B more for Azure, which its own CFO has privately doubted it can fund. That gap is now the real risk. x.comÂ
Microsoft's hold on enterprise software and the cloud running AI makes it one of tech's best positions to own. Fiscal Q1 revenue rose 19% on Azure and the AI stack, while operating income rose 21% and net income 32%. Grade: A. x.comÂ
Microsoft's faster Azure growth on less capital spending than feared is the mix investors wanted from Big Tech. Azure brought in $33.2 billion last quarter, up 48%, its third consecutive quarter of accelerating growth; capex was $45.2 billion versus $50.8 billion expected. x.comÂ
Microsoft is losing AI share in coding, and private markets are signaling it before public ones. Jordan Novet lays out how GitHub lost the AI coding market, while Anthropic's valuation rose from $380 billion to $900 billion as Claude Code surged and SpaceX holds a $60 billion option on Cursor. Microsoft is down 13% this year; the private market is the leading indicator of these market-share shifts. x.comÂ
Microsoft is underpriced relative to its fundamentals, which is why Bill Ackman sold Google to buy it. Its P/E has compressed to 23x, the lowest in years, while Azure grows 39% year over year and AI revenue runs at $37 billion annualized, up 123%. A $625 billion revenue backlog supports demand, and $190 billion of capex points to future dominance, not recklessness. x.comÂ
