Schwab Network on $MSFT (Oct 29, 2026)
Microsoft had a very strong quarter: revenue, EPS and Azure beat, Azure guidance of 49 and 50% constant currency topped 47.6%, and AI demand is sharp. But the stock fell as a 10-tranche debt raise and capex delayed into next quarter weighed on shares, which show a rounding top.
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Uh Microsoft on the plus side this morning. Not a dramatic swing, but it's notable given how Alphabet Google. Let's dive into some of those numbers.
The shade Diane. Okay. Yes, we are seeing uh you know Microsoft moving to the downside here a little bit. Uh actually I mean it did actually have a pretty decent quarter but it is close to actually going flat on the session so far here.
Revenue did actually beat the street's expectations coming in at $90.74 billion and the adjusted earnings per share came in at $489 versus the street's estimates of $4.73. And Azure revenue came in at $33.17 billion.
That's a 48% increase on a year-over-year basis. The street was looking for $32.84 billion. Now the big surprise was actually the free cash flow that came in at 18.6 billion. Street was looking for 8.54 billion.
And the reason for some of this uh beat especially when you're looking at the capex which actually came lighter than the streets expectations is because some of the products they were expected to spend on or deliver were actually delayed for the next quarter.
So a lot of that miss on the capex guide is going to come in in the next quarter. But obviously OpenAI relationship continues to drive some revenue growth around $10 billion of revenue was actually attributed to OpenAI in the corner and their guidance was largely above the street's expectations with Azure growth expected to be between 49 and 50% in constant currency. Street was looking for 47.6%.
So this is actually a really really good quarter for Microsoft. Obviously we see we saw early on this year the questionability when it comes to their business and uh being able to once again uh maintain their market share because of artificial intelligence and it shows that they are still seeing a very sharp uh amount of demand.
Now another reason why we are seeing this move to the downside this morning uh they actually did announce uh a capital raise or a debt raise and it looks like it's going to be in 10 different tanches.
So, we know as they raise capital, especially in the debt market, Dian has been a little bit of a negative for a lot of these uh stocks. So, unfortunately, a nice pop to the upside, but it looks looks like they're going back to the debt market here uh over the next couple of years, and that is once again the reason why we're kind of seeing this rounding top and move to the downside to start off today's session.
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