MSFT Stock Today, January 29: Earnings Beat, AI Capex Surge Hits Shares
Microsoft stock (MSFT) beat expectations for the quarter ended 28 January, posting revenue of USD 81.3 billion and EPS of USD 5.16. Shares fell after hours as management flagged a sharp rise in AI data‑centre spending. Investors in Switzerland are weighing Azure cloud growth against higher capital needs and the impact on free cash flow. We explain the AI capex guidance, the Azure backlog tied to OpenAI, and what this means for near term valuation and positioning.
Earnings snapshot and market reaction
Microsoft delivered revenue of USD 81.3 billion and EPS of USD 5.16, topping consensus. Growth came from cloud, security, and early AI workloads across enterprise customers. Gross margin held up thanks to software mix, while opex stayed disciplined. The print confirms solid demand into calendar 2026 as customers modernise infrastructure and adopt AI-assisted tools across productivity and developer workflows.
Despite the beat, Microsoft stock slipped in late trading as investors focused on capital intensity and near term cash conversion. Management highlighted rising data‑centre investments to support AI training and inference. Traders questioned whether earnings upgrades can offset higher depreciation and slower free cash flow. Local coverage echoed the concern over higher AI spending source.
For Swiss investors, the setup is clear. Strong fundamentals face a valuation that depends on durable AI demand. Short term, higher capex can pressure free cash flow yields. Medium term, if Azure AI monetisation scales, margin headwinds can ease. Currency is a second lens. Returns will vary with USD–CHF moves, so position sizing and hedging matter alongside earnings momentum.
AI capex: scale, timing, and margin impact
AI and data‑centre capex rose 66% to a record USD 37.5 billion. Management guided 2026 spend to USD 115–135 billion as Microsoft adds GPUs, power, and networking for training and inference. This scale supports Copilot, Azure OpenAI Service, and custom models. The question for Microsoft stock is whether unit economics improve fast enough to defend today’s multiple.
Higher capex lifts depreciation in future periods and can compress free cash flow near term. Offsetting forces include stronger Azure consumption, higher premium SKUs, and longer customer commitments. If AI utilisation rises, revenue per GPU improves and payback shortens. Investors should watch capex per revenue added, and the ratio of AI services revenue to total capex quarterly.
Key markers include AI workload utilisation, regional data‑centre buildouts coming online, and supply chain lead times for accelerators. We also track pricing for inference, as that drives recurring margins. External coverage notes investor focus on rising AI outlays and how quickly they convert to growth source. Clear progress on these items should help Microsoft stock sentiment.
Azure cloud growth and OpenAI exposure
Azure cloud growth remains the engine, supported by migrations, security, data platforms, and AI services. The backlog includes substantial AI projects, with customers committing multi‑year spending. Strong attach of Copilot and developer services can lift average revenue per user. For Microsoft stock, the debate centers on how much of this demand is incremental versus cannibalising traditional workloads.
Investors are assessing how much Azure’s backlog leans on OpenAI‑powered services. Reliance brings attractive early demand but adds concentration risk and potential variability in model economics. A broader mix of in‑house and open‑source models would lower risk. Disclosures on customer diversification and model choice will be important for durability of growth.
With a premium multiple, small changes in Azure growth or AI monetisation can move the stock. If growth outpaces capex, multiples can hold. If capex ramps faster than revenue, free cash flow yield could compress, pressuring Microsoft stock. We expect management to guide conservatively while scaling capacity and highlighting expanding committed spend.
What it means for Swiss investors
Swiss investors buy the Nasdaq listing in USD, so CHF performance depends on FX as well as price. Consider CHF‑hedged instruments if you want to reduce currency swings. Be mindful of broker FX costs, US dividend withholding, and tax reporting. For long term savers in Switzerland, steady contributions can smooth volatility around earnings and AI investment cycles.
Given strong balance sheet and cash generation, a core position can make sense, sized to your risk. Use staggered entries to manage the after‑hours drop risk. Pair Microsoft stock with Swiss defensives or global value to balance factor exposure. Revisit position size if capex ramps without clear AI utilisation or if Azure growth slows materially.
Watch three items: AI capex trajectory versus guidance, Azure consumption growth and backlog conversion, and disclosures on OpenAI dependence. Track free cash flow trends and margin commentary. If utilisation improves and committed spend scales, we expect sentiment to stabilise. If not, expect further multiple compression and a deeper after‑hours drop risk.
Final Thoughts
Microsoft delivered a clean earnings beat, yet the market focused on the 66% jump in AI capex to USD 37.5 billion and a much larger 2026 plan of USD 115–135 billion. The near term trade hinges on whether Azure AI demand can scale fast enough to protect free cash flow and the premium multiple. For Swiss investors, keep an eye on capex intensity, Azure consumption, and customer diversification beyond OpenAI. Consider currency exposure in CHF and stagger entries while volatility is elevated. If utilisation and pricing improve, Microsoft stock can regain momentum. If not, wait for clearer cash flow traction before adding.
FAQs
Why did Microsoft stock fall after hours despite an earnings beat?
Shares slipped because investors focused on the sharp rise in AI and data‑centre capex, which can weigh on near term free cash flow. The market wants proof that Azure AI demand will scale fast enough to offset higher depreciation and support the current valuation. Until visibility improves, reactions can stay choppy.
What is Microsoft’s new AI capex guidance?
Management signaled AI and data‑centre spending of USD 115–135 billion for 2026, after reporting a 66% jump to USD 37.5 billion this quarter. The investment supports GPUs, power, and networking for AI training and inference. Investors will watch utilisation, pricing, and revenue per GPU to judge payback and margin impact.
How important is Azure cloud growth to the story?
Azure is the core growth driver. Adoption of AI services, security, data platforms, and Copilot can lift consumption and backlog quality. Investors are watching how much backlog relies on OpenAI and whether demand is incremental. Strong Azure cloud growth is key for defending the multiple on Microsoft stock as capex rises.
What should Swiss investors consider now?
Focus on three items: AI capex versus revenue conversion, Azure consumption trends, and diversification beyond OpenAI. Manage USD–CHF currency risk with position size or hedged products. Consider staggered entries around results and guidance updates. If free cash flow improves alongside growth, Microsoft stock risk‑reward becomes more attractive.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
