Microsoft Q3 Review: Azure 40%, AI $37B — But One Big Warning Light
Microsoft just reported Q3 FY2026 results — and the instruments are mostly green.
Revenue grew 18%. EPS grew 23%. Azure grew 40%, or 39% constant currency. Microsoft’s AI business crossed a $37 billion annualized revenue run rate, up 123% year over year.
But there is one major gauge investors need to keep watching: capex.
Microsoft is guiding to roughly $190 billion of capital spending in 2026. That does not break the thesis, but it raises the bar. Azure growth, AI revenue, margins, and free cash flow now have to prove that the spending curve is worth it.
In this SkiesCapital Captain’s Log, I break down:
• Microsoft Q3 FY2026 earnings
• Azure growth and AI revenue momentum
• Margin strength despite heavy AI investment
• Commercial RPO and future revenue visibility
• The $190B capex concern
• Whether MSFT still looks reasonable at today’s valuation
Captain’s Call: Thesis status — improving.
The flight plan is intact, but capex ROI is now the key gauge to watch.
For educational purposes only. Not investment advice.
Think Clearly. Invest Better.
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