The software giant finds itself juggling multiple fires this week. On one side, Microsoft pushed out patches for 137 vulnerabilities across Windows, Azure and Dynamics 365, while simultaneously wrestling with a cloud service disruption that left Windows 365 subscribers unable to install Office applications. Yet the operational hiccups stand in stark contrast to a booming artificial intelligence business that has already generated $30 billion in revenue from the OpenAI partnership over the past two years.
Among the security fixes, a critical privilege escalation flaw in the single sign-on plugin for Jira and Confluence draws particular concern. Microsoft has classified several other bugs as highly dangerous, including vulnerabilities in Word. No active exploitation has been detected so far. The company is also swapping out old Secure Boot certificates that expire this summer for the first time since 2011, warning users to expect additional restarts in May.
The Windows 365 outage stems from a botched configuration change, according to the company, which expects a full resolution by Friday. Despite these technical distractions, investors are largely brushing off the short-term disruptions and focusing on the bigger picture.
Record Revenue Tempered by Heavy Spending
Microsoft’s fiscal third quarter delivered revenue of roughly $83 billion and earnings per share that climbed 23%, beating analyst expectations. Azure growth of 40% powered the results, though that pace trails rival Google Cloud. For the current fourth quarter, management guided revenue as high as $87.8 billion, with heavy capital spending on data center expansion driving the outlook.
That capital commitment is the real story. Capital expenditure is on track to hit a record $190 billion this fiscal year, an enormous bet on artificial intelligence infrastructure that has made some hedge funds uncomfortable. TCI, one of the more vocal funds, recently trimmed its stake, citing long-term risks tied to the company’s AI dependency.
Should investors sell immediately? Or is it worth buying Microsoft?
The New OpenAI Calculus
The relationship with OpenAI has been reframed in recent weeks. Microsoft originally invested $13 billion in the startup and now collects a revenue share from OpenAI that has been capped at $38 billion through 2030 — a lower ceiling than earlier projections had suggested. In exchange, Microsoft gave up its exclusivity rights, allowing OpenAI to sell access to its models through competing cloud platforms such as Amazon Web Services and Google Cloud.
Yet the tech giant retains the intellectual property rights to OpenAI’s models until 2032 and holds a 27% stake in the for-profit arm of the organization. Wedbush analysts view the revised deal as a net positive, arguing that structural ownership of the IP is more valuable than exclusivity.
CEO Satya Nadella defended the partnership during testimony in the ongoing Elon Musk lawsuit against OpenAI, calling the investment a highly successful bet. A court ruling on OpenAI’s non-profit status is expected on May 18.
Stock Under Pressure Despite Analyst Optimism
Microsoft shares have fallen roughly 14% year-to-date, trading at €347.15 after briefly touching €344.75 earlier in the week. That places the stock just above its 50-day moving average. The average analyst price target of $562 implies substantial upside, but near-term sentiment is weighed down by the sheer scale of AI-related capital spending and lingering questions about when the payoff will materialize.
Shareholders have another date to watch: On May 21, the stock will trade ex-dividend, with the regular quarterly payout of $0.91 per share due shortly after. For now, Microsoft remains a story of operational strength running headlong into the enormous cost of building the next generation of cloud and AI infrastructure — all while keeping the software platform patched and running smoothly.
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