The problem this quarter isn’t revenue—it’s that revenue isn’t keeping pace with spending.
Excluding payments to partners, revenue was $111.2 billion and earnings per share were $2.12. Both came in below Wall Street expectations, and the stock fell as much as 7.9% after hours.
Was that after-hours drop about earnings or valuation? The overlooked item was spending: capital expenditures have already surged to a record high.
The company is already providing computing power to companies like Anthropic and Meta, and its own models have been integrated into Search, YouTube, and Gmail. The revenue stream is there; it just hasn’t yet delivered enough relative to the scale of spending.
If revenue still hasn’t caught up with spending next quarter, this judgment will hold. If it does, the judgment will no longer apply.
#CanMicrosoftDeliverOnThePromiseOfAI
Excluding payments to partners, revenue was $111.2 billion and earnings per share were $2.12. Both came in below Wall Street expectations, and the stock fell as much as 7.9% after hours.
Was that after-hours drop about earnings or valuation? The overlooked item was spending: capital expenditures have already surged to a record high.
The company is already providing computing power to companies like Anthropic and Meta, and its own models have been integrated into Search, YouTube, and Gmail. The revenue stream is there; it just hasn’t yet delivered enough relative to the scale of spending.
If revenue still hasn’t caught up with spending next quarter, this judgment will hold. If it does, the judgment will no longer apply.
#CanMicrosoftDeliverOnThePromiseOfAI
