Microsoft Stalls as $678 Billion Backlog Meets Falling Yields

This article first appeared on GuruFocus.

Microsoft (NASDAQ:MSFT), the enterprise-software and cloud-computing leader, edged up less than 0.1% to $487.40 Tuesday morning as falling Treasury yields supported the Nasdaq. The near-flat move sends a blunt message: cheaper money helps, but Wall Street remains fixated on the enormous bill behind Microsoft’s AI buildout.

Fiscal fourth-quarter revenue jumped 18% to $90 billion, powered by 43% Azure growth and a 27% increase in Microsoft Cloud revenue to $59.3 billion. Commercial remaining performance obligations exploded 84% to $678 billion. Demand is not the problem. Turning that mountain of contracted business into profitable revenue is the real test.

That backlog equals roughly 7.5 quarters of Microsoft’s current companywide revenue, giving the company extraordinary visibility. The valuation picture also…