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Microsoft Corporation (NASDAQ:MSFT) was among the stocks Jim Cramer highlighted, as he discussed the massive AI infrastructure buildout. Cramer discussed the company’s latest quarterly report, as he remarked:
Third, there’s Microsoft, much tougher, okay, and I mean like much tougher. They got clobbered today, down nearly 4%. Ouch. I didn’t want this. But rooting doesn’t mean anything, right? We don’t root for stocks… Microsoft delivered a nice top and bottom line beat, revenue up 18% year over year…. All major lines came in ahead of expectations. The key number for Microsoft these days is Azure revenue growth. That’s the company’s cloud infrastructure business, and it’s where the lion’s share of Microsoft’s investment spending’s going. For the quarter, Azure revenue grew 40% year over year, fabulous, a point ahead of expectations. Some people will say two points ahead.
Then we got what I thought was a solid conference call. Management said Azure could grow 39 to 40% in constant currency during the current quarter. That’s much better than what analysts were expecting. I cheered that. But then there’s Microsoft’s overall revenue guidance for the current quarter, and that was a little light. And their total paid Copilot users was 20 million, which you know, some were underwhelmed by that. I thought it was okay. At the same time, Wall Street didn’t seem to like what Microsoft had to say about its CapEx budget. Unlike the other big tech companies, they had basically been giving you this guidance on a quarter-by-quarter basis.
This time, management said they’d have over $40 billion in capital spending this quarter, higher than expected. And they indicated it could go even higher in the coming quarters, offering a CapEx forecast of $190 billion for the calendar year 2026. No, after that CapEx commentary, the stock started rolling over in after-hours trading, and it kept sinking today. In the end, I think Microsoft just didn’t give investors enough good news to justify the elevated spending levels that they were projecting. Do you know that this was actually, it was looking up nicely, but people hadn’t put pen to paper and figured out exactly that they were spending a lot, they’re spending more money. We don’t want that.
Microsoft Corporation (NASDAQ:MSFT) develops software, hardware, and cloud-based solutions. The company provides products like Windows, Azure, Office, LinkedIn, and Xbox.
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