Microsoft's Soaring Capex Raises Market Concerns Amidst Valuation Appeal
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Apr 25 2026
0mins
Should l Buy MSFT?
Source: NASDAQ.COM
- Surging Capex: Microsoft's capital expenditures soared to $37.5 billion in its fiscal Q2 ending December 31, marking a staggering 66% year-over-year increase, which, while alarming to the market, is essential for keeping pace with rapid advancements in artificial intelligence and maintaining competitive leadership.
- Cloud Business Growth: The company's cloud division reported a 29% year-over-year sales increase to $32.9 billion, contributing to an overall revenue growth of 17% to $81.3 billion, showcasing its robust performance in the cloud market and significant future growth potential.
- Attractive Market Valuation: Despite a more than 10% drop in Microsoft's stock price in early 2023, hitting a 52-week low of $356.28 on March 30, Morningstar's assessment indicates that the stock is currently undervalued by 38% relative to a fair value estimate of $600, presenting an appealing opportunity for investors.
- Expansive AI Market Outlook: The AI market is projected to reach $335 billion in 2023 and grow to $1.3 trillion by 2032, providing Microsoft with strong long-term growth momentum, although concerns regarding its reliance on OpenAI for a significant portion of its remaining performance obligations have raised investor apprehensions.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 420.770
Low
500.00
Averages
631.36
High
678.00
Current: 420.770
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company. The Company develops and supports software, services, devices, and solutions. The Company’s segments include Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services. This segment primarily comprises: Office Commercial, Office Consumer, LinkedIn, and Dynamics business solutions. The Intelligent Cloud segment consists of server products and cloud services, including Azure and other cloud services, SQL Server, Windows Server, Visual Studio, System Center, and related Client Access Licenses (CALs), and Nuance and GitHub; and Enterprise Services, including enterprise support services, industry solutions and Nuance professional services. The More Personal Computing segment primarily comprises Windows, Devices, Gaming, and search and news advertising.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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- Customer Support: Azure Marketing VP Jessica Hawk stated that the expansion aims to help customers scale critical workloads while ensuring secure and resilient cloud and AI services, thereby enhancing customer trust and satisfaction.
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- Ambiguity in AI Governance: As AI technology matures, the delineation of AI responsibilities at the executive level has become unclear, with existing roles like Chief Technology Officer and Chief Information Officer complicating governance, prompting firms to establish dedicated CAIO offices to address these complexities.
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