# Microsoft's Azure backlog and capex shape outlook through 2026

Digest AI · Business & Funding · published 2026-09-20T17:11:00Z

Canonical: https://digestai.news/story/microsoft-s-azure-backlog-and-capex-shape-outlook-through-2026

## Summary

Microsoft reported Azure crossing $100 billion in annual revenue for the first time and a 43% year‑over‑year growth in the fourth quarter. Management guided to roughly 45% constant‑currency growth for the first quarter of fiscal 2027. Commercial remaining performance obligations rose to $678 billion, up 84%, with the portion beyond 12 months up 112%.

Microsoft 365 Copilot passed 30 million paid seats, GitHub Copilot revenue accelerated over 60% quarter over quarter, and Foundry serves 100,000 customers. Analyst sentiment shows 14 strong‑buy and 38 buy ratings, with a forward P/E of 25. Free cash flow fell to $66.99 billion for fiscal 2026, down 6.46%, and Q4 free cash flow dropped 23.2%. Calendar‑2026 capex expectations are roughly $175 billion, while FY27 capex will grow again. Cash and equivalents fell 30.78% to $20.94 billion. The stock trades at $493.78, having moved from $517.85 to $395.50 across fiscal 2026. If Azure delivers the guided growth and AI spending translates to revenue, the backlog could support the next two years; a miss or higher capex could challenge the thesis.

## Key points

- Azure crossed $100 billion annual revenue and grew 43% YoY in Q4, with guidance for ~45% constant‑currency growth in Q1 FY27.
- Commercial remaining performance obligations rose to $678 billion, up 84%, with the portion beyond 12 months up 112%.
- FY2026 capex reached $115.95 billion (up 79.62% YoY) and calendar‑2026 capex is expected around $175 billion.

## Why it matters

The massive Azure backlog and rising AI‑focused capex give investors a view of Microsoft’s revenue visibility and spending risks, influencing valuation and stock performance.

## Sources

1. [Azure, AI Capex, and What to Expect Out of Microsoft Through The End of 2026](https://247wallst.com/investing/2026/09/21/azure-ai-capex-and-what-to-expect-out-of-microsoft-through-the-end-of-2026) (247wallst.com, 2026-09-20)

## Cite

Digest AI, "Microsoft's Azure backlog and capex shape outlook through 2026", 20 September 2026, https://digestai.news/story/microsoft-s-azure-backlog-and-capex-shape-outlook-through-2026

---

Written by Digest AI's editorial model from the linked sources; the sources are the record. Headlines, digests and key points are written by Digest AI and may be quoted with a link to the story page. Linked articles belong to their publishers. Terms: https://digestai.news/terms#reuse
JSON: https://digestai.news/story/microsoft-s-azure-backlog-and-capex-shape-outlook-through-2026.json