Microsoft Stock: Strong Fundamentals Support Hold Despite Rising Capex

Microsoft's stock has risen by 31.2% in three months, outperforming the Computer - Software industry and the broader Computer & Technology sector. The company's fundamentals remain strong across cloud and enterprise software, giving existing shareholders reason to hold onto their shares.

Azure and other cloud services revenues grew 43% year over year, ahead of prior guidance, while Azure revenues surpassed $100 billion for the first time, up 41%. Customer demand continues to exceed available capacity, with the data center footprint expanding by 31 new facilities in the quarter alone.

Microsoft's enterprise software stack is showing traction with AI-native products. Microsoft 365 Copilot has surpassed 30 million paid seats, and the E7 suite has been adopted by large enterprise customers within months of release. Foundry has also surpassed 100,000 customers, while GitHub Copilot has grown to 50 million users.

However, growth is not uniform, with CRM-related bookings within Dynamics 365 continuing to moderate amid longer sales cycles. Management guided Productivity and Business Processes segment revenues to $36.7-$37 billion for the fiscal first quarter, suggesting growth of 11-12%.