Microsoft Stalls on Enormous Backlog Despite Tech Sector Rebound

Microsoft's stock remained nearly flat on Tuesday morning despite a rebound in the technology sector. The company edged up less than 0.1% to $487.40, supported by falling Treasury yields that also boosted the Nasdaq.

The tech giant's fiscal fourth-quarter revenue jumped 18% to $90 billion, with Azure growth increasing by 43% and Microsoft Cloud revenue rising 27%. However, the real concern lies in the enormous backlog of contracted business, which exploded 84% to a staggering $678 billion. This massive figure represents roughly 7.5 quarters of Microsoft's current companywide revenue, giving it extraordinary visibility.

The valuation picture for Microsoft looks tempting, with shares trading 15.81% below the estimated value of $578.95. However, this discount is not a free pass, and the company must prove that its massive capital commitments can generate attractive returns in the future.