CapEx Is in Focus for Microsoft Stock Ahead of Q4 Earnings, But the Bull Case Remains Strong

Microsoft is set to report fourth-quarter fiscal 2026 earnings on July 29, with investors focused on whether its large AI investments are translating into stronger cloud growth. While demand for Azure, AI services, and paid Copilot subscriptions is expected to support another solid quarter, elevated capital spending could weigh on sentiment. Microsoft plans $190 billion in capital expenditures during fiscal 2026, mainly to expand data centers and AI infrastructure, and the article notes this is pressuring margins and free cash flow near term. It points to last quarter’s year-over-year gross margin decline as AI infrastructure ramped and AI workload costs increased. Management has guided only modest acceleration for Azure growth, and the article says supply constraints—especially AI infrastructure capacity—are expected to persist through 2026. Still, it highlights momentum: Q3 revenue of $82.9 billion (+18% YoY), Microsoft Cloud revenue of $54.5 billion (+29%), Azure and related services up 40%, and an AI revenue run rate exceeding $37 billion. Paid Copilot seats topped 20 million.