Microsoft Corporation (NASDAQ:MSFT) ‘s shares have marked a major turnaround in 2026. They are up by more than 20% since late-July following the firm’s second quarter earnings on July 29th. The fact that the firm has spent billions of dollars in investments in AI means that Microsoft Corporation (NASDAQ:MSFT)’s narrative is driven by the performance of its AI business. This business is under the Azure platform, and in his morning appearance on September 3rd, Cramer commented on the firm’s recent decision to begin reporting its Azure revenue in dollars on a quarterly basis:
“We’ll get some clarity there. I wouldn’t think you would reveal Azure numbers unless you could so that you’re really not that dependent on OpenAI.”
Microsoft Corporation’s decision to report Azure revenue is an important one given the narrative surrounding the firm’s stock and the competitive AI industry. It provides clarity about its AI profitability and revenue and enables investors to compare the firm with peers such as Amazon and Google, both of whom report dollar revenue figures.
According to Microsoft Corporation’s latest release, Azure grew its revenue by 42% to $29.42 billion in the firm’s June quarter. For the current quarter, the firm guided revenue growth to sit at 44% to 45%. The revenue growth figure is important as it outpaces Microsoft Corporation’s broader revenue growth in the fourth quarter by a wide margin. Its fiscal Q4 revenue growth was 18%. During the same quarter, Azure revenue also crossed $100 billion on an annual basis for the first time. Coupled with the fact that Microsoft Corporation’s Copilot seats exceeded 30 million, with 2x sequential net new additions, the bullish camp had to be ecstatic about the significant AI tailwinds.
Yet, the scale of the bill to fuel this growth continues to be a question mark. During its FY26, Microsoft Corporation’s capital expenditure sat at a whopping $115.9 billion. Additionally, during Q4, capital expenditure excluding financial leases was $35.4 billion. Not to mention, while Azure’s growth is 42%, the fact that in the current fiscal year, the base is $100 billion, Microsoft Corporation might find it difficult to sustain this level.
Looking at hedge fund sentiment, 273 out of 1,006 funds tracked by Insider Monkey in Q2 had held a stake in Microsoft Corporation. The figure marked a dip over the 282 out of 1,022 in Q1. Notable exits included Two Sigma Advisors and TCI Fund Management. Looking at the valuation, the forward P/E ratio of 24.81 is slightly higher than Amazon’s 23.64 and Google’s 22.
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