Microsoft’s AI data-center plans face scrutiny as spending rises

Reports say Microsoft is tightening oversight of some outside AI data-center projects, while the company’s investment in computing capacity continues to weigh on free cash flow. The supplied coverage also highlights strong Azure growth and questions whether the stock’s valuation is justified.

• Reports on Nov. 5 said Microsoft was tightening oversight of some neocloud projects and would not exercise an option to expand its Nscale agreement at a Texas data center; Microsoft had not confirmed the reports.· 2 sources
• Microsoft reported about $60 billion in free cash flow over its last four reported quarters, roughly 23% less than in the comparable year-earlier period, while Azure revenue grew 48% year over year in its fiscal first quarter.· 2 sources
• The article’s author argues that the stock is not attractive at its reported price, citing the gap between earnings and cash generation and the possibility that building more company-owned capacity could further pressure cash flow.· 2 sources