Microsoft got here out of this summer time’s earnings season wanting like a prudent spender. Not like rival cloud computing corporations Amazon and Alphabet, which each burned money because of their heavy AI investments, Microsoft not solely generated $19.6 billion in free money circulation within the June quarter however forecast it’ll proceed to generate money for a minimum of the following 12 months. The end result helped swing funding sentiment to the constructive facet, lifting the inventory 29%.
What hasn’t obtained sufficient consideration is how Microsoft has managed to remain money circulation constructive. One longstanding motive is that Microsoft leases information middle capability from different corporations together with neocloud corporations—corresponding to CoreWeave—rather more closely than both Amazon or Google. That reduces its near-term capital expenditures however may give it much less management over prices sooner or later.
