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Audit The Herd

CPA, Corporate Finance Professional

30 Jun, 13:12Latest

Microsoft's falling ROIC understates how its AI spending is turning into durable value. Heavy capex, $30 billion in the March 2026 quarter, cut ROIC from about 23% to 21.5% and pushed cloud gross margin to the mid-60s. But Azure grew 40%, with AI adding 16 points, the AI business hit a $37 billion run rate, up 123%, and commercial remaining performance obligations reached $625 billion, up 110%. Copilot is early: about 4% of enterprises use it company-wide, yet paid seats top 20 million, up 250%. x.com

MSFT

23 Jun, 11:27

Microsoft's price assumes AI revenue keeps compounding while enterprise customers still cannot tie AI spend to revenue or savings, so it stays on the watchlist rather than a buy. Copilot in Excel cuts model building from a morning to 20-30 minutes, Azure grows in the high 20s on AI workloads, and Office, LinkedIn and GitHub cushion the downside. If CFOs question $30 per seat for light users, seats could stall and the multiple adjust. A quarter or two of material AI revenue would change that. x.com

MSFT

Nicholas Mugalli

Institutional TMT & Macro Research, AI/Semiconductors/Policy

28 Oct

MSFT

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.com

Crossroads

Retail Investor, YouTube Investing Creator

30 Jul

MSFT

Microsoft's good-enough approach to AI offers a model beyond capex that eats free cash flow before returns are visible, and its earnings may have triggered an inflection in the AI trade. Related stocks rose as soon as the CFO said Microsoft will be free-cash-flow positive next year. Copilot is not the best AI product, but it has 30 million paid seats and keeps improving. Only time will tell which approach is right, but good enough usually works out for Microsoft. x.com x.com

Alex

Canadian Dividend Investor, Founder of The Profit Zone/Profit Academy

6 Jul

MSFT

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.com

Rihard Jarc

Co-Founder & CIO of New Era Funds, AI/Cloud/Semiconductor Research

30 Jul

MSFT

Microsoft's latest earnings showed accelerating Azure growth with broad demand beyond frontier AI labs, capex discipline and Copilot turning the corner. Azure grew 43%, guided to 45%, with nearly 90% of $214 billion cloud revenue from customers outside frontier labs and RPO up 84% to $678 billion. It held capex while squeezing more from existing infrastructure, and can slow chip purchases if demand cools. Copilot passed 30 million paid seats, with revenue up over 60% quarter over quarter. x.com

Prepared Remarks

Equity Investor, Macro Commentary

28 Oct

MSFT

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.com

Oliver | MMMT Wealth

Founder of MMMT Wealth, CPA, Technical/Fundamental Analysis

28 Mar

MSFT

Microsoft is losing ground in fast AI innovation and is not cheap enough to compensate. Copilot was strong a few months ago but is no longer competitive in an agent-driven world, and the stock closed below its 200-week moving average for the first time since 2013. At about 21x forward EPS for 22% growth it is solid but not cheap, and compared with Nvidia there is little argument for allocating even 1% of a portfolio to Microsoft. x.com

Asymmetric Bets

Hedge Fund Analyst, Private Company CFO, Idiosyncratic Stocks & Accelerating Fundamentals

26 Oct

MSFT

Microsoft's AI ROI is massive because it expects to sustain its current 18% year-over-year growth with 27% fewer employees. It is cutting its workforce by 27%, undercutting claims that AI has no ROI. x.com

Architect of Alpha

Long-Term Stock Investor

28 Oct

MSFT

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.com

Kairos

Stock Research

21 Aug

MSFT

Microsoft's revenue dependence on OpenAI is a negative, though not as bad as expected. Of Azure's more than $100B of fiscal 2026 revenue, $24B came from OpenAI. Replying to @sv_techie, who heard 70% of Microsoft's AI revenue comes from OpenAI: it is unclear how AI revenue is quantified, but the Azure figure is solid. x.com x.com

SouthernValue

Public Markets Investor

29 Oct

MSFT

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

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