Should You Buy Microsoft Stock Despite Its Ballooning CapEx?

Microsoft (MSFT) stock has lagged several of its big-tech peers over the past three months, which comes as a surprise given the company’s consistently strong financial results over the past several quarters. The primary factor weighing on Microsoft shares is growing concern about its rapidly expanding capital expenditure (CapEx), particularly amid fears of an artificial intelligence (AI) bubble.

During the first quarter of the current fiscal year, Microsoft spent $34.9 billion on CapEx, well above its earlier guidance of $30 billion. This sharp increase reflects surging demand for the company’s cloud and AI offerings, especially across its Azure platform. The company said that about half of this spending was directed toward assets such as GPUs and CPUs, which are essential for handling rising workloads tied to cloud infrastructure, AI applications, and the replacement of aging server and networking equipment.