Microsoft Reports Strong AI-Driven Cash Flow Growth
Microsoft announced continued cash generation from its artificial intelligence (AI) investments, with shares rising over 8% in extended trading following the report. The company exceeded expectations for cloud revenue growth and provided a capital expenditure forecast below Wall Street estimates due to an accounting change related to data center leases. Azure's fourth-quarter revenue rose by 43%, surpassing analyst forecasts of nearly 40%. CEO Satya Nadella highlighted Microsoft’s shift toward developing its own AI models alongside custom chips, achieving efficiency gains up to 40%. The company also outlined a vision for flexible enterprise AI adoption. Despite Google Cloud posting an impressive cloud revenue surge last week, Azure's performance suggests it remains competitive in the market. Microsoft forecast first-quarter fiscal year 2027 sales of $90.4 billion and expects Azure growth to reach 45%, well above analyst estimates. The company reported strong fourth-quarter free cash flow but noted a decline compared with the prior year due to increased capital expenditures.
Topics: AI capital expenditures cloud computing stock performance