Microsoft's Azure grew 48% YoY in the quarter to September, up from 40% a year earlier. Over the same three months, free cash flow (non-GAAP) fell 27.4% YoY.
Microsoft spent $45.2 billion on CapEx including finance leases in the quarter, as it builds out AI data centres. It guides calendar 2026 CapEx to about $170 billion. The day after results, it priced $25.0 billion of new notes.
Customer contracts back much of that spending. Commercial RPO (revenue customers have contracted but Microsoft has not yet recognised) was $677 billion, up 73% YoY. The shares closed at a record $555.80 on 4 November.
Today's note covers Azure and the backlog, guidance, the impact of the AI buildout on cash flow, the valuation, and what today's share price assumes.
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