Microsoft’s stock has gone nowhere even as the company keeps posting the kind of numbers that usually excite investors. Shares are down roughly 9.6% over the past year, while the software giant says demand for its cloud and artificial intelligence services continues to outstrip the capacity it can deliver.
The latest quarter showed why the business is still growing fast. Microsoft generated $82.9 billion in revenue, up 18% from a year earlier, while Microsoft Cloud revenue climbed 29% to $54.5 billion. Azure and related cloud services grew 40%, and the company said commercial remaining performance obligation surged 99% to $627 billion, with roughly one-quarter expected to turn into revenue over the next 12 months. Longer-duration commitments jumped 138%.
The numbers also show how much of Microsoft’s growth is now tied to AI. The company said its AI revenue run rate exceeds $37 billion annually, up 123% from a year ago, and Copilot paid seats surpassed 20 million, a 250% increase. Microsoft said the number of enterprises deploying more than 50,000 Copilot seats has quadrupled. Management also said it expects Intelligent Cloud revenue to reach as much as $38.25 billion next quarter, with growth of up to 28%, and Azure growth near 40% in constant currency.
That is the part investors have not been willing to reward. Microsoft continues to dominate cloud computing and artificial intelligence, but its stock has lagged peers such as Alphabet, which has surged on AI enthusiasm, and Amazon, which has gained 28% over the past year. The gap reflects a simple concern: the company is spending heavily to keep up with demand, and the payoff is not showing up in the share price.
Microsoft plans to spend nearly $190 billion on capital expenditures in 2026, including about $25 billion in rising component costs. Those figures underscore the pressure on margins and the size of the buildout still ahead. The company says supply constraints around AI infrastructure capacity are expected to persist through at least 2026, which means growth may stay strong even as the cost of reaching it keeps climbing.
For now, Microsoft is still winning the race for usage, revenue and enterprise adoption. The market is signaling something different: investors believe the business is excellent, but they want proof that all this spending can translate into a stronger microsoft stock price before they pay up for it.
