Microsoft: AI CapEx Is A Good Problem To Buy

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.