The author keeps adding to Microsoft (MSFT), most recently at $555.80 after the October earnings report, because the company sells AI and cloud capacity years ahead and funds the build with its own cash flow. Commercial remaining performance obligation (RPO) rose 73% to $677 billion, Azure grew 48%, and Microsoft Cloud revenue reached $63.9 billion, up 30% year over year. Operating cash flow hit $58.0 billion, and Microsoft still returned $10.2 billion to shareholders while raising its quarterly dividend to $0.98 from $0.91. The risks the author flags include capex of about $170 billion expected for the calendar year and a 23.19% drop in free cash flow in Q4 FY26. The article also explains why the author does not invest in Amazon or Oracle, pointing to Amazon's negative free cash flow and Oracle's reliance on outside funding.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on Yahoo Finance ↗
Keywords
MSFTcloud computingdata centersdividends
Open a keyword to see other news on the same topic.
Related tickers and likely impact
MSFT
• NeutralMicrosoft
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Information Technology |
| Industry | Systems Software |
| Market cap | $3.9T |
| Close on 11/04/2026 | 556.03 |
| Change that session | +6.73% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- Microsoft Corp. (MSFT) Surges 37.8% on Record Quarterly Gains
Bristol Gate Capital Partners said its US Equity Strategy lagged the S&P 500 (+2.3%) in Q3 2026, weighed down by declines in industrial and semiconductor-equipment holdings, though it still outpaced the index on dividend growth. Microsoft was the largest contributor, with shares up 37.8% over the quarter. Revenue rose 18% in its fiscal fourth quarter, Azure and other cloud services grew 43%, and the company raised its dividend by 8%. The stock closed at $521.91 per share, a market capitalization of $3.88 trillion.
- Microsoft Showed Me What I Needed to Know to Do What I Was Going to Do Anyway
The author says they bought more Microsoft shares after the October 28 earnings report, which showed fiscal first-quarter revenue of $92.28 billion, up 18.8%, and Microsoft Cloud revenue of $63.9 billion, with Azure up 48%. Non-GAAP EPS of $4.89 beat the $4.72 consensus, the sixth straight beat, and commercial remaining performance obligations rose 73% to $677 billion, with CFO Amy Hood saying customer demand exceeds available supply. The main risk the author watches is spending: capital expenditures rose 102.99% to $39.37 billion, cash fell 29.70%, and fiscal 2026 free cash flow slipped 6.46% to $66.99 billion. The author prefers Microsoft over Alphabet and Amazon for its cash flow and dividend, and plans to hold through the decade-long AI adoption cycle.
- Microsoft’s Dividend Yield Looks Small. The Check It Writes Every Year Doesn’t.
Microsoft's (MSFT) dividend yield is only about 0.67%, yet the total cash it pays out each year ranks among the largest dividend payments in corporate history. In fiscal 2026 (ended June 30), Microsoft paid $26.445 billion in dividends, about 9.8% more than the prior year, and the board has since raised the quarterly payout to $0.98 per share. Dividends used roughly 39.5% of the company's $66.987 billion in free cash flow and about 14.5% of its $182.935 billion in operating cash flow, even as capital spending rose 79.62% to $115.948 billion to build AI and cloud capacity. Annual dividend payments grew about 140% from $11.006 billion in fiscal 2016. The article argues that the payout size and free cash flow coverage say more about the reliability of the income than the headline yield does.
- Microsoft’s Diversified Backstop Keeps Me Buying
The author, an individual investor, says Microsoft's three businesses each pay their own way, so a weak spot in one can be offset by the others, and says they keep adding to the stock every quarter. In fiscal Q4 2026, Intelligent Cloud revenue reached $39.31 billion, up 32%, Productivity and Business Processes rose 14% to $37.85 billion, and total revenue grew 17.8% to $90.01 billion. Commercial remaining performance obligations hit $678 billion, up 84%, and the quarterly dividend rose to $0.98 from $0.91. The main risk cited is capex, which reached $115.95 billion in fiscal 2026, up 79.6%, and could weigh on returns if AI demand cools. Microsoft 365 Copilot now has over 30 million paid seats.
- IREN Stock Drops After Report Says It's Behind Microsoft's AI Spending Delay, As Investors Turn To Earnings
Microsoft spent less than expected on capital expenditures last quarter, blaming delays in some third-party capacity coming online. IREN's stock fell after a report said it was lagging behind Microsoft's AI spending delay, as investors turned their attention to earnings.
- I Graded Microsoft's Latest Report on 3 Things. Here's My Verdict on the Stock.
Microsoft reported fiscal first-quarter 2027 results (three months ending Sept. 30, 2026): revenue rose 19% to $92.3 billion and adjusted EPS grew 18%, while the stock barely moved. Azure revenue grew 48%, beating the company's 44% to 45% constant-currency forecast, even though some third-party data center capacity arrived late. However, capital expenditures reached $45.2 billion, free cash flow fell about 27% to $18.6 billion, and Microsoft Cloud's gross margin dipped to 66%. For the next quarter, management expects Azure growth of 49% to 50% and capex above $50 billion. The author grades Azure an A, spending and margins a C+, and the outlook a B+; with shares near $530, about 29 times adjusted earnings, the author feels the stock already reflects most of the good news and wants a lower price.
Related markets
Latest news
- Binance Cuts Off SignalPlus API Keys Over 'Potential Security Issue' at Trading Platform
Binance has removed all API keys linked to SignalPlus, a Hong Kong-based third-party crypto options and derivatives platform, after SignalPlus reported a 'potential security issue.' Binance said its own systems are unaffected and user funds remain safe, and urged SignalPlus users to review their positions and open orders and wait for SignalPlus to confirm the issue is resolved before reconnecting. Automated strategies running through SignalPlus will stop until users create new keys, and Binance asked all integrated third-party platforms to review their security controls. The move follows Binance's hack a week earlier, in which about $6.4 billion was drained from hot wallets and which the FBI has attributed to North Korean hackers; Binance says it has replenished about 98% of the stolen assets and is reopening withdrawals in phases.
- Renegade Gold Identifies New Gold Targets Along the LP-Uchi Corridor in Red Lake
Renegade Gold reported first-pass till and soil geochemical results from its 2026 program at the LP-Uchi project, about 50 km east of Red Lake, Ontario, identifying multiple new multi-kilometre gold anomalies along the LP fault corridor. The anomalies coincide with fault structures interpreted from the winter 2025/2026 drone magnetic survey, and 884 samples were collected in total. The results complement high-grade channel samples from BobJo (16.2 g/t Au over 5.0 m) and Belanger (25.9 g/t Au over 0.3 m), and fieldwork across the Confederation Belt is now complete. The company plans to rank the targets and advance them toward drill-readiness for its 2027 exploration program.
- Wendy's rejects takeover proposal from Nelson Peltz's Trian
Wendy's said it is rejecting a $1.4 billion takeover offer from a group led by Nelson Peltz's Trian Fund Management, which proposed $7.35 per share in cash on Oct. 28 to take the burger chain private. The group also includes BlueFive Capital, Sixth Street Partners and Flynn Group, one of Wendy's largest franchisees. An independent board committee formed in February concluded the proposal 'substantially undervalues' Wendy's and does not reflect the potential gains from its ongoing turnaround. In its third-quarter report, same-store sales fell for a seventh straight quarter, but earnings and revenue beat Wall Street expectations, and Trian declined to comment.
- An Anthropic IPO when the AI trade is this turbulent? Godspeed!
Wall Street is taking a harder look at AI costs following historic midterm election results. The piece also highlights the potential upside of Apple's limited spending on artificial intelligence.
- Apple Vs. Tesla: Low CapEx Only Matters if Non-Cyclical Cash Flows Come With It
Apple and Tesla both reported spending below expectations: Apple's fiscal 2026 capex fell 28.9% to $9.04 billion, while Tesla cut its 2026 capex guidance to about $20 billion from $25 billion. Apple's September-quarter revenue rose 11.7% to a record $114.48 billion, with Services reaching $31.6 billion at a 76% gross margin, while Tesla's revenue was flat at $28.05 billion and GAAP operating income fell to $718 million. Tesla said capex would keep expanding over the next few years, and Elon Musk put spending on its planned Terafab chip fab at “certainly in the tens of billions” through early 2028. The author views Apple's cash flow as more resilient in a downturn, while Tesla suits investors willing to fund autonomy before cash arrives. Apple shares are up 28.92% this year, while Tesla is down 14.35%.
- IREN is Only Fit for a Specific Investor Currently
IREN, trading at $21.71, counts Microsoft and NVIDIA as customers and is shifting from Bitcoin mining to AI cloud services, but its stock has fallen 46.37% in a month. Fiscal 2026 revenue rose 41.1% to $707 million, yet fourth-quarter revenue of $137.2 million missed estimates and fell 26.8% year over year, and a $450.4 million impairment drove a $684 million net loss for the quarter. Management targets $4 billion of contracted ARR in operation by year-end, and the company holds $5.90 billion in cash. However, it posted a $702.6 million loss for fiscal 2026, spent $4.33 billion on capex, and fiscal 2027 EPS estimates have fallen sharply. The article says the outlook now depends on delivery over the next one or two earnings reports.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.