Microsoft Corp. (NASDAQ:MSFT) generated nearly $28 billion more free cash flow than Alphabet Inc.
A. Davidson analyst Gil Luria says matters in the AI race.
“Microsoft’s going to be fine. They don’t need capital,” Luria told the Prof G Markets podcast Thursday.
Yet Microsoft is seeking $25 billion or more in a bond sale, as its finance chief says borrowing is a choice, not a necessity. Why Microsoft Has the Advantage Luria said Microsoft has spent three years renting additional computing capacity from neocloud providers, allowing it to meet surging demand without building every data center itself.
Google is now adopting a similar approach, but Luria warned that outsourcing capacity could squeeze margins as its own infrastructure spending accelerates. “Microsoft started this strategy three years ago and is now much better positioned to manage its cash flow.
” The difference showed up in September’s results. 1 billion.
“They’re all spending a lot, but Microsoft’s doing it a little bit more responsibly,” Luria said. And with companies competing for financing to sustain the AI boom, that discipline could become increasingly important.
“Capital is finite,” he warned. S.
company, allows it to borrow on favorable terms, potentially locking in financing for up to 40 years. And unlike many companies funding the AI boom, Microsoft is still generating cash after paying for its infrastructure.
2 billion European Commission fine contributed to the shortfall. The scale of AI borrowing is raising concerns about a potential bubble.
On Polymarket’s AI bubble market, traders put the odds of a qualifying downturn at 8% by December 31, rising to 23% by June 2027. The market requires three major distress events within 90 days.
Microsoft expects capital spending to exceed $50 billion next quarter, adding to the AI lending boom.
