By Faizan Farooque
Publication Date: 2026-08-07 16:38:00
This article first appeared on GuruFocus.
Microsoft Corp. (MSFT, Financials), the software and cloud giant, is standing out among U.S. hyperscalers as one of the few still generating positive free cash flow while rivals pour hundreds of billions of dollars into artificial intelligence infrastructure.
Alphabet turned free cash flow negative in the second quarter after capital spending surged to $44.9 billion. Amazon’s trailing 12-month free cash flow also slipped to negative $7.6 billion as it raised its 2026 capital spending plan to about $220 billion. Meta remained slightly positive, but its cash balance fell sharply as spending accelerated.
Microsoft is spending heavily too, with fiscal 2026 capital expenditures running around $175 billion. The difference is that Azure growth remains strong enough to absorb more of that investment. Azure revenue climbed 43%, while annual Azure revenue surpassed $100 billion.
That gives Microsoft…