Microsoft's AI Edge: Company Gets Better Returns from Artificial Intelligence Investments
Both Microsoft and Amazon are investing heavily in artificial intelligence (AI), but one company is getting far better returns. In their recent quarterly results, both companies reported impressive growth and significant spending on AI.
Microsoft's Azure cloud platform grew by 43% last quarter, with the company expecting a 45% increase next quarter. Amazon's AWS cloud platform grew by 37%, but Microsoft has a larger order book, with $678 billion in backlog compared to Amazon's $496 billion.
The return on investment is where the two companies diverge significantly. While both are spending enormous sums, Microsoft is getting far more back per dollar spent. In the full year, Amazon plans to spend around $220 billion on capital expenditures (capex), while Microsoft expects to spend $190 billion.
Microsoft's cash flow from operations was $55.4 billion, up 30% year-over-year, with free cash flow standing at $19.6 billion. In contrast, Amazon's free cash flow turned negative in Q2 2026, with an outflow of $7.6 billion over the past year.