Microsoft Raises $25 Billion as AI Spending Expands

Amazon (AMZN) and Intel (INTC) shares dropped after earnings reports. Amazon's spending on AI infrastructure led to negative free cash flow, while Intel's outlook disappointed despite revenue growth. Both companies are investing heavily in AI. Alphabet (GOOGL) also fell due to spending concerns, while Microsoft (MSFT) reported positive results.

Anthropic, an AI startup, generated 48% of its 2026 revenue from partnerships with Google, Amazon, and Microsoft, up from 11% in 2023. The company reported $11.6B in Q2 sales and $974M operating profit, but faces risks from its reliance on these cloud providers, who are also competitors and investors. Anthropic's IPO will test AI sentiment among investors, with concerns about high costs and potential antitrust scrutiny.

Microsoft sold $25 billion in bonds, its first U.S. investment-grade sale since 2017, with proceeds for general corporate purposes. Shares fell 0.16% after the announcement, despite a 48% Azure growth report. The company's CFO noted increased capex and debt repayment plans, with fiscal Q1 operating cash flow up 29%. Analysts have a mid-target price of ~$1,290, suggesting a 143% total return by 2031.

Microsoft (MSFT) and Alphabet (GOOGL) are integrating AI agents into their products, with differing monetization strategies. Microsoft plans usage-based billing for Copilot, reporting 75% quarterly growth in customers. Alphabet focuses on advertising opportunities, with Gemini app reaching 1 billion users. Microsoft's revenue rose 19% YoY to $92.28B, beating estimates, while Alphabet missed revenue targets at $127.58B.

Microsoft priced a $25 billion bond sale for general corporate purposes, including share buybacks and acquisitions. The deal, rated AAA by S&P, is set to close in 2026. Finance chief Amy Hood mentioned using debt markets for additional funding. Oracle also plans to raise capital, expecting positive free cash flow by mid-2028.

Microsoft issued $25B in bonds, its first since 2017, with proceeds for general purposes including AI. Orders reached $115B, 4.6x the deal size. Shares closed at $530.14, down 0.16%. The company has $64.5B in cash and $31.1B in long-term debt. Azure revenue grew 48%, but spending concerns persist.