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Microsoft's AI Payoff Cycle Set to Deliver Significant Returns
Microsoft's investment in AI is finally paying off and could lead to significant financial returns for years to come, according to analysts at 24/7 Wall St.
The company's fiscal Q4 2026 revenue hit $90.01 billion, up 17.8% year over year, with non-GAAP EPS of $4.74 beating estimates by 11.81%. Additionally, Azure crossed the $100 billion mark in full-year revenue for the first time.
The analysts point to Microsoft's $678 billion RPO backlog as a key factor in their bullish outlook, which converts today's capex into tomorrow's revenue.
They also highlight the company's strong operating margin of 46.78%, compared to Alphabet's 34% and Amazon's 10.83%. This justifies Microsoft's premium valuation multiple.