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Summary

Microsoft is aggressively investing in AI infrastructure, driving elevated capex and near-term margin pressure, yet underlying demand remains robust.

MSFT’s capacity constraints are limiting current AI and cloud revenue, justifying ongoing capex and indicating unmet demand through at least 2026.

Despite heavy investment, total EBIT margin expanded to ~47%, and management guides for further margin improvement this year.

MSFT trades at ~13–14x NTM EV/EBITDA—historical lows—offering a buying opportunity as the market discounts delayed, not diminished, long-term returns.

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Capex is rising sharply, but demand remains constrained, and the valuation tells a different story.

I last covered Microsoft Corporation ( MSFT ) with the argument that the market is too focused on near-term margin pressure and not enough on

Analyst’s Disclosure: I/we have a beneficial long position in the shares of MSFT either through stock ownership, options, or other…