Microsoft: AI CapEx Is A Good Problem To Buy

Dhierin Bechai Investing Group Leader Follow Summary Microsoft delivered 18% revenue and 21% operating income growth in FY26, with Azure revenue surpassing $100 billion and Copilot adoption accelerating. Azure growth accelerated to 43% in Q4, with management guiding for approximately 45% constant-currency growth in Q1 FY27, underpinned by robust AI demand. Capital expenditures remain a key risk, exceeding $50 billion in Q1 FY27 and constraining free cash flow growth despite strong operating results. I maintain a strong buy rating with a price target of $777.77, as MSFT's AI monetization and operating leverage outweigh near-term cash conversion risks. Looking for a helping hand in the market? Members of The Aerospace Forum get exclusive ideas and guidance to navigate any climate. Learn More » lcva2/iStock Editorial via Getty Images In July, I reiterated my strong buy rating for Microsoft Corporation ( MSFT ) after the stock had sold off on concerns about AI capital expenditures and disruption to the traditional software-as-a-service model. The stock This article was written by Dhierin Bechai 24.48K Followers Follow Dhierin-Perkash Bechai is an aerospace, defense and airline analyst. Dhierin runs the investing group The Aerospace Forum, whose goal is to discover investment opportunities in the aerospace, defense and airline industry. With a background in aerospace engineering, he provides analysis of a complex industry with significant growth prospects, and offers context to developments as they occur, describing how they might affect investment theses. His investing ideas are driven by data informed analysis. The investing group also provides direct access to data analytics monitors. Learn more. Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.