Microsoft (MSFT) shares edged lower ahead of the company's fiscal first-quarter earnings report on Wednesday, with investors looking for evidence that its substantial artificial intelligence investments are translating into sustainable revenue growth.

Alphabet and Microsoft reported strong earnings fueled by growing AI demand, even as the tech giants continue investing billions in data centers and cloud infrastructure.

Microsoft's fiscal Q1 2027 saw revenue increase by 19% year-over-year and operating income by 21%. Azure revenue grew by 48%. Meanwhile, free cash flow decreased by approximately 27% due to increased capital expenditures.

Microsoft Corp (NASDAQ:MSFT) shares gave back early gains on Thursday despite a stronger-than-expected quarterly performance, as investors weighed accelerating artificial intelligence (AI) demand against the prospect of sharply higher infrastructure spending in the second half of its

Microsoft is sitting on the biggest contracted backlog in its history while its stock trails the broader market by nearly 900 basis points, and the reason for that disconnect reveals everything about whether this setup is a trap or a buying opportunity.

Who is profiting from the AI boom?”While news stories focus on new AI services, the ones reliably receiving money behind the scenes are the cloud companies that rent out the computers used to run AI.On October 28,

CFO Amy Hood cited delays in third-party capacity as Wall Street scrutinizes returns on AI spending.

Microsoft and Alphabet both reported capital expenditures that fell short of estimates, adding to concern over the cost of the AI build-out.

Microsoft has never disclosed Azure's quarterly revenue in dollars. But for the first time, we can see just how close it is getting to besting the biggest competitor in the market, AWS.

Microsoft Azure Q1 FY2027 earnings showed 48% year-over-year revenue growth to $33.2 billion -- the platform's fastest rate in at least two years -- while capital expenditure landed $6 billion below analyst estimates and the company introduced its 'Agents and Infra' segment to declare AI agents its primary cloud revenue driver for years ahead.