Microsoft (MSFT) is coming off the most profitable stretch it has posted in years, and its stock trades at $493.95, about 92% of its 52-week high. Nothing here is broken. The risk is quieter than that. The spending that came with those margins is still climbing, and the company has already told shareholders what it expects that to do to fiscal 2027.
Net margin over the trailing twelve months is 40.3%, the highest in at least five years and well above a 36.8% three-year average. Operating margin runs 46.8% against a 45.3% three-year average, near the top of its multi-year range. Revenue of $331.8 billion grew 17.8% year over year, so none of this came from a shrinking business.
Margins at a peak rarely stay there. This peak arrives with a specific and growing bill, and that bill is the Azure build-out.
Azure revenue grew 43% in fiscal Q4 2026, and management says customer demand still exceeds available capacity. Company-wide, the build-out took $41 billion of capital expenditure in that one quarter (including equipment acquired under leases), roughly two-thirds of it on what management calls short-lived **** ets, primarily CPUs and GPUs. Against $55.4 billion in cash from operations, cash actually paid for property and equipment was $35.8 billion, yielding $19.6 billion in free cash flow.
The bill is already visible in the margin. The company's gross margin was 67% in fiscal Q4 2026, down year over year, and management attributes the decline to the sales mix shift toward Azure and the AI infrastructure spending behind it, offset only partly by efficiency gains. Capital expenditure is guided higher again in fiscal 2027.
#azure #bill #cash
Net margin over the trailing twelve months is 40.3%, the highest in at least five years and well above a 36.8% three-year average. Operating margin runs 46.8% against a 45.3% three-year average, near the top of its multi-year range. Revenue of $331.8 billion grew 17.8% year over year, so none of this came from a shrinking business.
Margins at a peak rarely stay there. This peak arrives with a specific and growing bill, and that bill is the Azure build-out.
Azure revenue grew 43% in fiscal Q4 2026, and management says customer demand still exceeds available capacity. Company-wide, the build-out took $41 billion of capital expenditure in that one quarter (including equipment acquired under leases), roughly two-thirds of it on what management calls short-lived **** ets, primarily CPUs and GPUs. Against $55.4 billion in cash from operations, cash actually paid for property and equipment was $35.8 billion, yielding $19.6 billion in free cash flow.
The bill is already visible in the margin. The company's gross margin was 67% in fiscal Q4 2026, down year over year, and management attributes the decline to the sales mix shift toward Azure and the AI infrastructure spending behind it, offset only partly by efficiency gains. Capital expenditure is guided higher again in fiscal 2027.
#azure #bill #cash
3 hours ago
