Microsoft recorded a whopping $29.88 billion in capital expenditures during the second quarter of fiscal year 2026, which ended on December 31, 2025. This was a huge 89% jump compared to the same time last year! This brings their total spending on capital expenditures over the last four quarters to an incredible $83.09 billion, easily surpassing the $80 billion mark that was seen as a key commitment for building out their AI infrastructure.
Capital expenditures as a percentage of operating cash flow soared to about 47.4% in the last fiscal year. This is a big change from the historical average of 25% to 27% before the AI boom really took off. At the same time, free cash flow dipped by 9.3% year-over-year, landing at $5.88 billion. However, operating cash flow actually rose by 60% to $35.76 billion. What does this tell us? It means these massive investments are soaking up most of the company's operational gains.
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