MSFT just hit a decade low valuation. Azure is still growing 40%.

MSFT grew revenue 18% and pushed Microsoft Cloud past $54 billion. The stock is still being punished. The reason sits in one line: free cash flow declined as AI capex climbed. Chief Market Strategist Shay Boloor breaks down why the market is voting against one of the highest quality enterprise AI platforms in the world, and why the weighing machine eventually catches up. The print: • Revenue grew 18% year over year • Microsoft Cloud passed $54B in quarterly revenue, up 29% • EPS grew 23%, outpacing revenue • Azure grew 40% and remains capacity constrained • 20M+ paid Copilot seats, with paid seat additions up 250% year over year • Customers with 50,000+ seats quadrupled year over year • Commercial RPO reached roughly $627B • Free cash flow declined on heavy AI infrastructure spend • Trading at a decade low valuation on a $300B+ revenue base Shay initiated a trade in Microsoft because the market is treating one of the highest quality enterprise AI platforms in the world like its best days are behind it. The business is still compounding: Azure remains capacity constrained, the commercial backlog sits near $627B, and Copilot is finally scaling past 20 million paid seats. The deeper shift is Microsoft moving from charging per user to monetizing the work itself, seats plus consumption across agents, security, and governance. The bear case on AI capex and OpenAI exposure is real. The market is just temporarily focused on the cost of AI while underpricing the platform underneath it. About FE Earnings Edge: FE Earnings Edge is Futurum Equities' rapid-reaction earnings series with Chief Market Strategist Shay Boloor (@StockSavvyShay), breaking down the prints that move the AI, semiconductor, space, energy, security, and robotics names the firm covers. Disclaimer: This content is for informational and educational purposes only and should not be considered financial advice. Always do your own research.