NEW YORK, July 20, 2026, 14:05 EDT
Shares of Microsoft Corporation NASDAQ:MSFT gained roughly 2% on Monday after Azure expanded its semiconductor collaboration with Advanced Micro Devices Inc. NASDAQ:AMD. The main focus is on increasing investment. U.S. cash markets stayed open.
Microsoft forecasted fiscal fourth-quarter capital expenditures exceeding $40 billion, representing approximately 46 cents per guided revenue dollar, based on the top of the outlook range.
Roughly two-thirds of capital expenditures for the fiscal third quarter were allocated to short-duration assets, predominantly GPUs and CPUs, totaling nearly $21.3 billion. The deal with AMD relates to this spending category.
Azure plans to deploy AMD’s Helios racks to handle large-scale AI inference workloads. The deployment will feature EPYC processors, Pensando networking solutions, and ROCm software. AMD anticipates that shipments will begin in the second half.
Details on financial terms and deployment quantities were not provided. Microsoft CEO Satya Nadella stated that customers are seeking “performance, scale and choice.” MarketWatch
The deal could boost purchasing power and offers Microsoft an additional full-stack option for chips and networking. Cost benefits have not yet been demonstrated.
Quotes at around 13:50 EDT indicated that AMD experienced the greater short-term gain. Microsoft traded at a lower trailing multiple compared to two other cloud competitors.
| Company | Price | Day move | Trailing P/E |
|---|---|---|---|
| Microsoft Corporation NASDAQ:MSFT | $401.70 | up 2.0% | 23.9x |
| Advanced Micro Devices Inc. NASDAQ:AMD | $510.87 | up 3.0% | 167.5x |
| Nvidia Corporation NASDAQ:NVDA | $204.23 | up 0.7% | 31.1x |
| Alphabet Inc. NASDAQ:GOOGL | $353.22 | up 1.9% | 26.9x |
| Amazon.com Inc. NASDAQ:AMZN | $250.44 | up 1.3% | 30.0x |
AMD provides the hardware. Microsoft stands to gain if increased options reduce per-unit expenses or boost available capacity.
Microsoft trades at a trailing multiple of 23.9, under Alphabet at 26.9 and Amazon at 30.0. This difference heightens anticipation ahead of results on July 29.
Deutsche Bank AG’s NYSE:DB Brad Zelnick reiterated a Buy recommendation on Monday, stating that memory expenses, AI-driven profits, and reliance on OpenAI have been priced into the stock. He maintained his price target at $550.
Microsoft continues to set a high standard. Azure revenue is projected to increase by 39% to 40% in constant currency. The gross margin for Microsoft Cloud is expected to be around 64%, slightly down from the same period last year.
Rising component costs account for about $5 billion of the expected sequential jump in capex. AMD deployment is scheduled to begin in the second half.
Risks: Helios deliveries are set to begin later this year, but Microsoft has not revealed the scale of its order. Potential profit could be pushed back by issues with product launch timing, component supply, or software integration.
The following evidence arrives on July 29, when investors are set to monitor Azure’s expansion, margins in cloud operations, and the temporary portion of capital expenditure.
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