Microsoft taps debt markets with $25B bond sale to boost AI (MSFT:NASDAQ)

Microsoft plans a $25B bond sale in 10 tranches, maturing 2–40 years, with proceeds for AI and infrastructure. Q1 capex was $45.2B, up 30% YoY. Q2 capex exceeds $50B, with FY capex around $170B. AI-related investments drove growth in Foundry, Fabric, and Copilot. Commercial Cloud revenue rose 30% YoY to $63.9B. Azure revenue growth may accelerate to 49% in Q2. Analysts raised price targets.

Amazon's Q3 capital expenditure hit $77.3B, exceeding expectations by $20B, and reported a $7.6B cash burn. Tesla's capex surged 88% to $4.7B, but it lowered its annual forecast. Microsoft also reduced its spending target. Amazon and Alphabet maintained their full-year forecasts. Investors worry about Big Tech's AI spending and its returns.

Microsoft reported a 48% surge in Azure revenue to $33.165B, total revenue up 19% to $92.28B, and adjusted EPS of $4.89, exceeding expectations. CAPEX was $45.2B, below forecast. Microsoft shares rose 5% in after-hours trading. The company expects 49-50% Azure growth and $96B-$97.1B total revenue in Q2, outperforming analyst forecasts.

Alphabet's 12.64% drop due to missed revenue estimates dragged Nasdaq and Nikkei lower. A $6.3B Binance hack pressured Bitcoin toward $77,000. Treasury yields fell, but broader market panic was not evident. Key levels: Nasdaq 25,802.96, Nikkei 61,462.61, Bitcoin $75,000–$76,000.

Big Tech companies like Alphabet, Amazon, Microsoft, and Meta are investing heavily in AI (US$750B by 2026) while their core businesses slow. Alphabet's ad sales grew at the slowest pace in 5 quarters, and Amazon's e-commerce and ad growth slowed. Despite this, they maintained high capital spending outlooks. Shares fell, with Alphabet losing US$500B in market value. Cloud computing was a bright spot for both Amazon and Google, but AI integration is hurting Google Search's profitability.

Amazon, Microsoft, and Alphabet reported strong cloud growth but diverging cash flows. Amazon's AWS revenue rose 39% YoY, but free cash flow fell to a $42.4B deficit. Microsoft generated $18.6B in quarterly free cash flow, while Alphabet recorded a $9.1B deficit. Samsung reported a record operating profit of KRW 107.4T, driven by semiconductor demand. The results highlight the gap between immediate earnings for semiconductor suppliers and the longer recovery cycle for cloud providers.