REDMOND, Washington, September 3, 2026, 15:17 (EDT) — Shares of Microsoft Corporation NASDAQ:MSFT climbed 2.95% to $511.48 on Thursday, as the tech giant’s strong cloud momentum faced scrutiny from investors after reporting a quarterly capital expenditure surpassing free cash flow.
- At 15:13 EDT, Microsoft shares were up 2.95% at $511.48.
- Capital expenditure for the fiscal fourth quarter totaled $41.0 billion.
- Azure posted a 43% increase in revenue, with quarterly free cash flow totaling $19.6 billion.
The contrast highlights Microsoft’s main valuation challenge. While cloud demand is rising, new capacity investments require cash outlays before generating revenue.
Major technology stocks on Wall Street advanced as bond yields declined. By early afternoon, the S&P 500 was up 1.1%, and Microsoft had climbed 2.8%.
Microsoft regular-session price
The stock started the session at $504.58, climbing to a high of $515.13. By 15:13 EDT, 16.6 million shares had changed hands.
The operational outlook is robust. Revenue for the fiscal fourth quarter increased 18% to $90.0 billion, with Azure and cloud services up 43%.
Growth still runs ahead of the group
Azure sales are projected to grow close to 45% in constant currency for the current quarter, management said. Supply remains below demand, according to finance chief Amy Hood.
Committed business also provides support. Commercial remaining performance obligations climbed to $678 billion, an increase of 84%, with close to 30% expected within the next 12 months.
Cash conversion is a tougher metric. Capital expenditure totaled $41.0 billion, with $5.6 billion allocated to finance leases. Roughly two-thirds supported CPUs and GPUs with shorter lifespans.
The quarterly AI investment-to-cash bridge
Operating cash flow totaled $55.4 billion. The company spent $35.8 billion on property and equipment, resulting in $19.6 billion in free cash flow.
Michael J. Wolf from Activate Consulting described Microsoft as “winning on both fronts,” pointing to its cloud infrastructure and integrated workplace tools. Associated Press earnings report
Margins highlight costs. Microsoft Cloud posted a gross margin of 65%, trailing the company’s 67% overall figure. The Intelligent Cloud segment recorded a 41% operating margin.
Reliability of service faced a more immediate challenge after Azure encountered disruptions as part of a wider outage affecting AI services on Thursday, according to Axios. Microsoft refers users to its public status page for updates regarding major incidents.
Risks: Weakening AI demand may leave costly capacity unused. Ongoing outages have the potential to erode customer confidence, and shorter chip lifespans mean quicker replacement cycles.
Cash conversion is the next key metric for investors. Azure’s expansion needs to consistently surpass depreciation, leases, and replacement outlays.
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