Palihapitiya's AI Skepticism Put to the Test by Microsoft's Commercial Momentum

Billionaire investor Chamath Palihapitiya recently stated that artificial intelligence (AI) has 'literally zero' to do with earnings growth for the Global 2000 companies. However, Microsoft's Q4 FY26 earnings report reveals a different story. The company's revenue reached $90.01 billion, up 17.75%, and Azure surpassed $100 billion, up 41% for the full year. Commercial remaining performance obligations hit $678 billion, up 84%. Microsoft 365 Copilot passed 30 million paid seats, and by Q3, the AI business was already at a $37 billion annual run rate, up 123%.

Palihapitiya's skepticism is likely to be tested when NVIDIA reports its fiscal Q3 results on August 26. If Microsoft's contracted backlog is reflected in NVIDIA's guidance, Palihapitiya's 'literally zero' framing will be challenged against $678 billion of signed commitments. On the other hand, if NVIDIA misses expectations, the skeptics may own the narrative, shifting focus to companies powering and cooling AI data centers.

Microsoft CFO Amy Hood noted that demand continues to exceed available supply, while CEO Satya Nadella emphasized advancing the cost-to-outcome curve to turn tokens into business results. The company's Q4 capex was $35.8 billion, up 109.63%, with full-year capex hitting $115.95 billion, up 79.62%. Free cash flow fell to $19.64 billion, down 23.19%.