Microsoft Stock Drops as $41 Billion Capex Meets 4.8% Yields

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Microsoft shares fell about 0.9% to $502.59 on Tuesday as the 10-year Treasury yield approached 4.8%, pressuring the tech giant amid its aggressive AI spending. The company deployed $41 billion in capital expenditures in its fiscal fourth quarter, including $5.6 billion through finance leases, with roughly two-thirds funding processors, GPUs, and other shorter-lived equipment. Free cash flow came in at $19.6 billion, less than half the quarter's reported capital spending, though the balance sheet remains solid with $55.4 billion in operating cash flow and Azure revenue up 43%. Shares trade 13.48% below the GF Value estimate of $580.87, suggesting potential undervaluation, but with risk-free yields near 4.8%, investors demand faster proof that AI spending will translate into future profits.

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High capex and weak free cash flow raise concerns about AI spending profitability amid rising yields.

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