Microsoft reports fourth-quarter fiscal year 2026 results on July 30, marking the end of its fiscal year. Wall Street expects $87.7 billion in revenue and $4.24 in earnings per share. The real focus: whether Azure can maintain the 39-40% growth rate that’s powered the stock higher all year.

Azure grew 40% last quarter. That momentum is what investors bet on when they bought Microsoft at current valuations. Anything slower triggers questions about whether the AI boom is slowing down or whether Microsoft’s customers are just being more disciplined about spending. Either way, it matters.

Capital Expenditure Bomb and Free Cash Flow

Third-quarter capex hit $31.9 billion, up 49% year over year. Free cash flow fell 22% to $15.8 billion. That’s the trade-off investors are wrestling with: the company is spending at an unsustainable pace to build AI infrastructure, and cash generation isn’t keeping up. Management is guiding for FY2027 capex around $220 billion, roughly 20-30% growth from this year.

The thesis is that these massive outlays today will mint money tomorrow through Azure and Copilot. Investors need to hear evidence that paying customers are willing to foot the bill. Copilot has 20 million paid seats, but does that number matter if each seat doesn’t generate enough revenue to justify the chip spending?

FY2027 Guidance and Path to Profitability

The earnings report marks the end of the fiscal year, which means Microsoft has to guide for FY2027. That guidance will either reassure or terrify investors. If the company sees a path to margin expansion despite rising capex, the stock rallies. If management stays quiet or lowers expectations, the sell-off accelerates.

Listen carefully to how Satya Nadella frames the capex conversation. Is this a sprint to capture a new market, or a long march that’ll stretch into 2028?