- Price
- $535.07 → $529.05(−1.1%)
- Discount
- 10.8% → 11.8%(+1.0 pts)
- LSEG rating
- 1.72 → 1.70(−0.02)
- Thesis
- The market discounts Microsoft mainly because of its record AI data center spending. Capital spending, including finance leases, was $41 billion in the June 2026 quarter, and Microsoft guided more than $50 billion for the September 2026 quarter. Investors fear that this spending will hold down free cash flow for years before it pays back. For the gap to close, Azure revenue growth must keep pace with the new data center capacity. That would show that the spending buys revenue and not only cost. Azure growth was 43% in the June 2026 quarter,. For the September 2026 quarter, management guided Azure growth of 44% to 45% in constant currency, under a new and narrower Azure definition. Management says that Azure capacity is still smaller than demand. Microsoft also depends less on one AI partner. OpenAI contracted to buy an additional $250 billion of Azure services, and Copilot now offers Anthropic's Claude models together with OpenAI's models. In September 2026, Microsoft added new coding and agent tools to Copilot, and Azure customers started to use OpenAI's new GPT-6 Astra model. These are signs that AI products bring paid use and not only cost. Microsoft will report fiscal Q1 2027 results on October 28, 2026. That report will show whether Azure growth and margins hold as spending increases. If Azure keeps growing near its current pace through mid-2027, the gap can close over the next two to four quarters.
- Recent events
- 2026-10-12: Microsoft said that its own Maia 200 AI chip now runs production work, such as Copilot. It will scale the Maia chips to multi-gigawatt deployments from 2027 and make them the main system that runs AI models for its own products. Maia 300 starts production deployments in 2027. Microsoft expects it to give 40% more tokens per megawatt than leading GPU systems. This is a company estimate.
2026-10-07: Microsoft confirmed that it will report fiscal Q1 2027 results after the market closes on October 28, 2026.
2026-10-01: Microsoft said Ryan Roslansky, head of the Office and Teams group and former LinkedIn CEO, will leave the company at the end of 2026. Office and Teams now report to the Copilot, Agents and Platform organization of Charles Lamanna.
2026-09-25: Microsoft added new coding tools and an agent that works without stops to Copilot. The stock rose about 3.7% that day, to its highest close of 2026.
2026-09-15: Microsoft increased its quarterly dividend by 8%, to $0.98 per share. Microsoft will pay it on December 10, 2026.
2026-09-04: CEO Satya Nadella said that early Azure customers already use OpenAI's new GPT-6 Astra model. On September 3, Microsoft started to offer the model on its Foundry platform through a limited access program.
2026-09-02: Microsoft changed how it reports its results, starting in fiscal 2027. It now has two segments, Agents and Infra, and Devices and Consumer. Azure revenue no longer includes GitHub cloud, Security Copilot and Healthcare cloud. Under the new definition, Azure revenue was $101.9 billion in fiscal 2026 and grew 42% in the June 2026 quarter.
2026-08-21: Moody's kept Microsoft's Aaa credit rating with a stable outlook.
2026-07-29: Microsoft reported Q4 fiscal 2026 results. Revenue was $90.0 billion, up 18% from last year. Azure revenue growth increased to 43%. Capital spending, including finance leases, was $41 billion for the quarter. For the September 2026 quarter, Microsoft guided Azure growth of about 45% in constant currency and capital spending of more than $50 billion.
2026-04-27: Microsoft and OpenAI changed their partnership. Microsoft no longer has exclusive access to OpenAI's models and technology, and OpenAI can sell its services through other clouds, such as AWS. Azure stays OpenAI's primary cloud and gets new OpenAI products first. Microsoft no longer pays a revenue share to OpenAI, and OpenAI continues to pay a revenue share to Microsoft through 2030.
2025-10-28: OpenAI completed its restructuring into a public benefit corporation. Microsoft received a stake of about 27%, worth about $135 billion. OpenAI contracted to buy an additional $250 billion of Azure cloud services.