Microsoft Stands Out Among Cloud Giants With Positive Free Cash Flow and Lower Valuation

Earnings Impact 4
โดย The Motley Fool·US·Read original
Summary · why it matters

Amazon, Alphabet, and Microsoft all reported soaring cloud growth driven by AI demand, but Microsoft emerged as the clear standout by maintaining positive free cash flow and trading at a lower forward earnings multiple. Amazon Web Services revenue jumped 37% to $42.2 billion, Alphabet's Google Cloud surged 82% to $25 billion, and Microsoft's Azure grew 43% year over year, surpassing $100 billion in annual revenue for the first time. However, both Amazon and Alphabet reported negative free cash flow of $7.6 billion and $5.8 billion respectively due to heavy capital expenditures, while Microsoft generated $19.6 billion in free cash flow and expects to remain free cash flow positive in fiscal 2027. Microsoft also trades at 21 times forward earnings, compared to 25 for Alphabet and 26 for Amazon. All three companies are ramping up capex to meet AI demand, with Amazon planning $220 billion, Alphabet guiding to $200 billion at the midpoint, and Microsoft expecting $50 billion in the first quarter alone.

Impact on stocks 3

Artificial Intelligence± Mixed · 3 stocks
Microsoft Corporation
MSFT
▲ PositiveCapitalrelevance

Positive free cash flow of $19.6 billion, expected to remain positive in fiscal 2027, and lower valuation at 21 times forward earnings.

Amazon.com Inc
AMZN
▼ NegativeCapitalrelevance

Negative free cash flow of $7.6 billion due to heavy capex, and higher valuation at 26 times forward earnings.

Alphabet Inc Class C
GOOG
▼ NegativeCapitalrelevance

Negative free cash flow of $5.8 billion due to heavy capex, and higher valuation at 25 times forward earnings.

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