Microsoft shares are about 5% below their record after rising about 46% from their June low. June-quarter Azure and other cloud growth was revised from 43% to 42%; a Motley Fool columnist says the stock is fairly priced as spending rises and free cash flow falls.
Azure and other cloud revenue had grown 39%–40% over the prior three quarters. CFO Amy Hood cited efficiency gains and faster capacity delivery, which she said was quickly monetized. A September reporting change restated June growth to 42% and guidance for the quarter ending Sept. 30 to 44%–45%. June-quarter capital expenditures, including finance leases, rose 69% year over year to $41 billion. The calendar-2026 spending outlook fell from about $190 billion to $175 billion because of an accounting change for some data-center leases; Hood said the underlying plan was unchanged and expected spending to rise again in fiscal 2027.
Microsoft trades at about 29 times fiscal 2026 earnings, versus roughly 40 times at its October 2025 record. Free cash flow fell to about $67 billion in fiscal 2026 from $72 billion a year earlier; CFO Amy Hood's fiscal 2027 aim is to remain positive. OpenAI reportedly burned $3.7 billion of cash from January through March; Microsoft's arrangements with OpenAI generated $24.1 billion in fiscal 2026 revenue. Hood said nearly 90% of Microsoft's cloud revenue came from customers other than frontier-AI model makers. The author would consider buying if Azure growth reaches about 45% and free cash flow rises.
