This article first appeared on GuruFocus.
Microsoft (NASDAQ:MSFT), the enterprise-software, cloud and artificial-<a href="https://bitcomme.com/nurse-says-artificial-intelligence-has-become-part-of-everyday-medical-charting-ai-is-in-there-now/” title=”Nurse Says Artificial Intelligence Has Become Part of Everyday Medical Charting—’AI Is In There Now’”>intelligence heavyweight, rose approximately 0.5% to $483.56 Friday afternoon as mega-cap technology stocks clawed back ground. The rebound was hardly explosive. The 30-year Treasury yield remained near a 19-year high, forcing investors to demand more from companies priced for years of future growth.
Microsoft is delivering. Fiscal fourth-quarter revenue surged 18% to $90 billion, Azure revenue rocketed 43% and commercial remaining performance obligations exploded 84% to $678 billion. Free cash flow hit $19.6 billion and beat expectations, but it still dropped 23% year over year. The AI machine is growing fast. It is also devouring cash.
That $678 billion backlog is Microsoft’s weapon. The company already has the demand; now it must build enough computing capacity to collect the money. Higher yields punish distant profits, but Microsoft can bankroll the expansion internally while weaker rivals reach for expensive debt. The valuation picture adds another twist: the shares trade 16.32% below their $577.84 GF Value, suggesting Wall Street sees the spending surge but may be underpricing the cash still waiting in the pipeline.
