Home Earnings Analysis Tech  Summary Microsoft Corporation is riding strong enterprise AI adoption, with Azure growth and rising Office 365 ARPU supporting a structurally higher revenue mix from the cloud. Heavy AI infrastructure investment is driving multi‑quarter cloud gross margin compression, with management guiding Microsoft Cloud gross margin to roughly 64% next quarter. Capex is expected to balloon to $190B in 2026, including roughly $25B from higher GPU, CPU, and memory prices, heightening capex ROI concerns. Compared with hyperscaler peers, Microsoft’s aggressive capex has not translated into superior revenue or margin trends, raising questions about the efficiency of its AI spending. MSFT stock trades near its long‑term relative valuation norms versus large‑cap peers, with a 1-yr fwd P/E close to the long-term median vs. peers, suggesting the stock is close to fair value.…