Microsoft: the cloud that is still growing faster than it spends

Microsoft is the largest buyer of AI infrastructure that also sells it on at scale, and the numbers say the selling is keeping up. In the quarter to September 2026 revenue was $92.3B, up 19%, Azure grew 48%, the operating margin was about 50%, and commercial remaining performance obligations reached $677B, up 73%. It still generated about $18.6B of free cash flow in the quarter while spending about $44.6B on capex including leases. Conviction is MEDIUM because the spending is catching up with the cash. Capex roughly doubled on the year and is guided above $50B a quarter; free cash flow fell; and OpenAI was about 11% of revenue, with its receivable rising. In early November Bloomberg reported Microsoft tightening oversight of its neocloud suppliers (Nebius, IREN and Nscale) and stepping back from some sites, which matters for MenFem's IREN and Nebius calls and shows how much of Microsoft's capacity is rented rather than owned. BULLISH, conviction MEDIUM, three years. The direction is Connor's; the conviction is on MenFem's research recommendation. The entry is the live pre-market quote on 6 November 2026.