Microsoft Azure Grows 39% as Q2 Capex Hits $37.5B
Microsoft posted Azure revenue up 39% year-over-year with commercial RPO at $625 billion, but its Q2 capital expenditures soared to $37.5 billion, raising margin concerns. In contrast, Broadcom’s AI semiconductor revenue jumped 106% to $8.4 billion with 140% growth guided next quarter and secured capacity through 2028.
1. Microsoft Cloud Performance and Expenditures
Microsoft’s Azure revenue rose 39% year-over-year in the quarter, helping commercial RPO climb to $625 billion. However, Q2 capital expenditures reached $37.5 billion, the highest quarterly spend in years, which could pressure gross margins and cash flow.
2. Broadcom’s AI Semiconductor Surge
Broadcom delivered 106% year-over-year growth in AI semiconductor sales to $8.4 billion and guided for 140% growth next quarter. The company has secured capacity through 2028, providing revenue visibility and reducing supplier risk.
3. Comparative Valuation and Recommendation
While Microsoft’s scale and RPO underpin a robust cloud platform, its high capex dampens margin prospects. Broadcom’s superior growth rates, multi-year customer roadmaps and lower forward valuation position it as a more attractive AI investment.