Microsoft and Artificial Intelligence: Opportunities for Investors

Microsoft Corporation (NASDAQ:MSFT) continues to stand out as a notable technology and artificial intelligence stock following its earnings report. Richard Saperstein from Treasury Partners, in a statement on CNBC before the company’s earnings report, predicted that Microsoft would show around 30% growth in the Azure sector.

This growth expectation is said to continuously contribute to the company’s value, with Saperstein noting that $135 billion has been added just today. Microsoft continues to grow at the intersection of software and artificial intelligence, recording a growth rate of 33%. Analysts have a growth expectation of around 30% and foresee that they will meet this growth.

Microsoft recently published a strong quarterly report, surpassing analyst expectations with an annual growth of 40% in the Azure sector. However, a concern for investors was the approximately $35 billion in capital expenditures for the September quarter. A significant portion of these capital expenditures was spent on Nvidia chips to address capacity issues in the cloud business. This figure indicates a level significantly above market forecasts.

Wedgewood Partners included the following statements about Microsoft Corporation (NASDAQ:MSFT) in their investor letter for the third quarter of 2025: 'Microsoft has made significant investments in capital expenditures over the past few years, having built more than 2 gigawatts of data center capacity in the last 12 months alone. At the same time, it has provided highly attractive cash flow returns. The fiscal year 2025 saw gross property, plant, and equipment and capitalized leases reach $370 billion, signifying an increase of $260 billion since the fiscal year 2020. Cash flow has risen from $60 billion annually in 2020 to over $140 billion in 2025. Taking into account other assets on Microsoft's balance sheet, we calculate that gross cash flows have a capital return rate of approximately 20%, which is an exceptionally attractive return rate for such large investments.'

While acknowledging MSFT's potential as an investment, we believe that some artificial intelligence stocks offer higher returns and greater promises with limited downside risk. If you are looking for an artificial intelligence stock that is both cheap and benefits from Trump tariffs and reshoring, we recommend checking out our best short-term artificial intelligence stocks report.